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L'BRARY 

UNIV;:p,=;ty  of 
CALIFoiiMiA 
SAN  DJE60 


DISTURBING  ELEMENTS  IN  THE  STUDY 

AND  TEACHING  OF  POLITICAL 

ECONOMY 


DISTURBING  ELEMENTS  IN 

THE  STUDY  AND  TEACH- 

ING  OF  POLITICAL 

ECONOMY 


BY 


JAMES  BONAR 

M.A.  (Oxford),  LL.D.  (Glasgow) 


BALTIMORE 
1911 


Copyright  igii  by 
THE  JOHNS  HOPKINS  PRESS 


WILLIAMS  A  WILIUN8  COMPANY 
BALTIMORE 


TO 

J.  H.  H. 


PREFACE 

The  following  lectures  were  delivered  in  the 
Johns  Hopkins  University,  Baltimore,  April  25- 
29,  1910,  to  the  Economic  Seminary,  at  whose 
desire,  by  the  courtesy  of  the  University,  they 
are  now  printed. 

As  the  title  suggests,  they  are  discourses  not 
on  economic  error  in  general,  but  on  the  more 
subtle  fallacies  which  are  apt  to  invade  the  rea- 
soning of  trained  economists  in  spite  of  learning 
and  discipline. 

Such  errors  creep  in  from  a  popular  political 
philosophy  (Lecture  I),  from  want  of  any  political 
philosophy  (II),  from  mistaken  aversion  to  theory 
(III),  from  the  shortcomings  of  common  or  tech- 
nical language  (IV),  and  from  the  wrong  handling 
of  distinctions  of  time  (V) . 

That  the  course  of  the  reader  may  be  smoother, 
the  needful  notes  are  confined  to  an  Appendix. 

Ottawa,  December,  1910. 


CONTENTS 

PAGE 
PREFACE Vii 

Lecture  I 

''Liberty,  Equality,  Fraternity" 1 

Lecture  II 

"Government  is  Founded  on  Opinion"  .  .    30 

Lecture  III 

"It  may  be  so  in  Theory" 58 

Lecture  IV 

"Figures  can  Prove  Anything" 83 

Lecture  V 

"In  the  Long  Run" 104 

notes 133 

index 141 


Lecture  I 
''LIBERTY,  EQUALITY,  FRATERNITY" 

All  of  us  have  been  students;  many  of  us  will 
be  teachers,  in  the  narrow  sense;  all  of  us,  we  may 
hope,  in  the  wide  sense.  The  subject  before  us 
is  therefore  in  a  fair  way  to  be  familiar. 

Certain  aids  in  study  and  teaching  are  apt  to 
become  hindrances  when  tenderly  fondled.  In 
order,  for  example,  to  overcome  our  own  bias 
in  thinking,  we  may  adopt  another  man's  bias, 
as  a  too  conscientious  judge  on  the  bench  may 
be  unduly  severe  to  his  own  kith  and  kin.  It  is  as 
if  we  compound  for  sins  we're  not  inclined  to  by 
damning  those  we  have  a  mind  to.  It  is  a  failing 
that  besets  students  young  and  old,  and  it  may 
appear,  mutatis  mutandis,  even  in  teaching. 

Then  there  is  a  pitfall  more  especially  for  teachers 
in  John  Mill's  plan  of  ''saying  more  than  the 
truth  in  one  sentence  and  correcting  it  in  the  next." 
There  is  a  risk  that  the  first  sentence  may  hold  the 
field,  and  the  listener  forget  the  warnings  with 
which  the  utterance  of  it  was  accompanied. 

Such  risks  occur  in  all  studies  dealing  with 
human  society  if  not  in  all  studies  whatsoever. 
One  of  the  most  common  of  other  temptations  is 


2  DISTURBING   ELEMENTS 

the  temptation  to  hold  fast  to  an  opinion  simply 
because  we  have  begun  holding  it;  it  is  "our  own," 
and  we  should  seem  weak  to  give  it  up.  A  more 
vulgar  fault  is  to  reject  an  opinion  because  we  dis- 
like the  holders  of  it,  and  would  rather  ''err  with 
Plato"  than  be  right  with  them. 

An  exhaustive  list  of  such  besetting  sins  would 
be  so  sad  a  catalogue  of  mental  infirmities  that  we 
might  well  be  scared  away  from  study  altogether. 
But  there  is  a  difference  between  consciousness 
of  fallibility,  in  ourselves  and  others,  and  des- 
pair of  all  knowledge.  Even  political  economy 
has  made  visible  progress  in  the  last  hundred 
and  fifty  years,  in  spite  of  disturbing  elements 
that  the  later  economists  have  duly  perceived  in 
the  earliest,  and  the  latest  as  duly  in  the  later. 
To  look  at  one  or  two  of  these  elements  may  help 
us  to  enter  into  the  difficulties  of  the  subject 
itself,  and  may  show  us  how  they  have  in  some 
degree  been  overcome. 

The  first  that  presents  itself  may  be  described 
roughly  (on  Mill's  plan  of  an  economy  of  truth) 
as  Watchwords. 

Are  there  such  things  as  '  watchwords '  in  politi- 
cal economy?  We  are  familiar  with  them  in  poli- 
tics and  social  reform:  ''Liberty,  equality,  fra- 
ternity," "No  taxation  without  representation," 
"Peace,  retrenchment,  and  reform,"  "The  land 
for  the  people;"  and,  if  we  are  worthy  hearers, 
the  words  stir  the  blood;  they  keep  us  awake 
and  watchful;  and  we  think  we  know  what  they 


LIBERTY,  EQUALITY,  FRATERNITY  3 

mean.  Men  have  tried  to  sum  up  religion  in  the 
same  way,  as  'faith,  hope,  and  charity'  or  'love, 
order,  and  progress.'  It  seems  a  natural  tendency. 
But  a  watchword  is  a  detached  phrase  that  has 
taken  the  place  of  an  argument.  It  is  even,  with 
sluggish  minds,  the  substitute  for  an  argument,  a 
catch-word.  Of  course  it  need  not  always  be  the 
sign  of  a  sluggish  mind;  it  may  mark  the  pecu- 
liarity of  a  strong  mind.  Our  intellectual  leaders 
may  be  divided,  in  the  formula  of  the  old  logical 
books,  into  men  of  terms,  men  of  judgments,  and 
men  of  arguments,  to  be  called,  in  the  profounder 
cases,  men  of  ideas,  men  of  principles,  men  of 
reasonings.  Some  writers  are  remembered  by  their 
happy  epithets,  as  Cobbett  by  "the  old  lady  of 
Threadneedle  Street,"  Sydney  Smith  by  "a book 
in  breeches";  some  by  their  apothegms  and 
epigrams  as  Bacon  by  ''Nature  is  not  conquered 
except  by  obeying  her,"  Bentley  by  "No  man 
was  ever  written  down  except  by  himself,  "Schiller 
by  "The  history  of  the  world  is  the  judgment  of 
the  world."  This  second  class  (men  of  judgments) 
even  more  than  the  first  contains  the  poets,  and 
writers  like  Carlyle  and  Ruskin  who  are  near 
kin  to  the  poets.  The  third  class  is  the  class  of 
scientific  men  and  philosophers,  and  let  us  hope 
political  economists,  men  who  are  celebrated  for 
their  disentangling  of  fallacies  and  demonstration 
of  the  truth,  the  truth  as  the  conclusion  of  an 
argument,  not  as  asserted  in  a  dictum  from  intui- 
tion, men   who    test   all   things   before   holding 


4  DISTURBING   ELEMENTS 

fast  to  that  which  is  good.  It  may  happen  that 
men  mainly  belonging  to  this  third  class  have  the 
powers  of  the  others  also.  Reaching  a  principle 
by  reasoning  they  may  bring  it  home  to  others 
by  epigram  or  epithet,  which  makes  sleepers 
wake  up  and  ask  themselves  whether  truth  may 
not  lie  in  this  novelty  rather  than  in  their  old 
common  places.  A  watchword,  too,  may  revive 
a  reasoned  faith  as  well  as  an  unreasoned.  It 
is  quite  impossible  for  us  to  run  over  our  reason- 
ings every  time  a  controverted  subject  is  started; 
we  should  have  no  time  to  take  further  steps. 
The  important  condition  justifying  our  assumption 
of  a  principle  is  that  we  have  at  one  time  fully 
reasoned  it  out  and  could  on  occasion  do  it  again. 
This  is  what  my  old  master  in  philosophy  would 
have  called  the  '' relative  vindication"  of  watch- 
words. But,  though  the  influence  of  them  forms 
an  interesting  study  for  the  historian,  they  are 
hardly  an  aid  to  the  serious  student  of  political 
philosophy,  still  less  of  political  economy.  They 
are  almost  indispensable  to  the  agitator;  but  the 
agitator  is  seldom  looking  for  truth;  he  thinks 
he  has  already  arrived  at  it .  When  watchwords  are 
sufficiently  full  to  convey  a  proposition  (as  "Peace, 
retrenchment,  and  reform"  may  do),  it  is  a  pro- 
position seldom  quite  true  or  helpful,  seldom  more 
than  a  half-truth.  In  political  economy  especially, 
we  may  almost  say  roundly  that  you  cannot  put 
arguments  into  few  words,  still  less  convey  their 
whole  result  into  a  detached  phrase  like  a  watch- 


LIBERTY,    EQUALITY,    FRATERNITY  5 

word.  A  legal  friend  of  mine  was  once  reproached 
for  the  long  sentences  of  lawyers'  documents. 
He  answered  that  if  we  could  tell  him  any  other 
way  than  long  sentences  to  make  the  meaning 
of  a  document  quite  clear  he  would  admit  the  re- 
proach, but  not  till  then.  Even  as  it  is,  in  English 
law,  the  discovery  of  ambiguities  is  not  infre- 
quent. Conceive  what  a  chaos  there  would  be  if 
less  pains  were  taken. 

Since  it  has  been  acknowledged  that  watch- 
words are  of  little  help  in  political  economy,  it 
may  be  asked:  why  should  this  subject  be  chosen 
here? 

The  answer  is  that  the  existence  and  prevalence 
of  such  watchwords  will  sometimes  account  for 
an  otherwise  unaccountable  bias  in  the  reasoning 
even  of  strong  men  (of  the  reasoning  class).  The 
watchword  is  often  a  walking  prejudice;  its  famil- 
iarity keeps  alive  conclusions  inconsistent  with  the 
strong  man's  own  reasonings.  It  does  not  belong 
to  his  own  particular  range  of  study  but  comes 
from  the  street  into  his  room,  like  the  notes  of  a 
passing  band  of  music,  awaking  old  memories  and 
associations.  Sometimes  it  is  a  political  watch- 
word that  influences  the  economist,  or  a  maxim  of 
journalism  that  influences  the  statesman.  Of  the 
last  kind  is  the  saying,  ''Statistics  can  prove  any- 
thing"; of  the  first  is  the  watchword  "Liberty  and 
Equality."  The  full  French  formula,  "Liberty, 
Equahty,  Fraternity,"  has  probably  affected  eco- 
nomics less  than  the  shorter  American  "Free  and 


6  DISTURBING   ELEMENTS 

Equal."    Still  it  has  had  its  share  of  influence,  and 
(we  might  agree)  in  a  right  direction. 

But,  where  there  is  a  latent  principle  at  work, 
it  should  be  made  patent;  it  should  be  either  vindi- 
cated or  else  frankly  postulated,  that  it  may  be 
contradicted  by  those  (in  this  case,  say  Fitzjames 
Stephen)  who  do  not  believe  in  it.  Some  such  work 
needs  to  be  done  for  economics  as  was  done  by 
Cornewall  Lewis  for  politics  in  his  Use  and  Abuse 
of  Political  Terms.  Ambiguity  of  terms  often 
involves  covert  assumption  founded  on  the  ambi- 
guity; and  it  is  one  of  the  tasks  of  the  economic 
student  to  get  rid  of  ambiguity  as  far  as  he  can. 
One  of  the  causes  of  it  undoubtedly  is  that  a 
non-economic  meaning  lingers  in  the  mind  of  the 
economist  in  spite  of  his  own  economic  defini- 
tions; and  perhaps  this  has  been  so  in  the  case 
of  the  word  "liberty."  All  through  the  Wealth 
of  Nations  some  of  us  think  we  see  the  influence 
on  the  writer's  mind  of  the  idea  of  political 
liberty.  His  notion  of  economic  liberty  is  the  re- 
moval of  all  restraints  that  prevent  the  com- 
mercial ambition  of  individuals  from  realizing 
itself  according  to  the  lights  of  the  individuals. 
Such  a  removal  of  restraints  he  calls  a  ''simple 
system  of  natural  liberty."  He  thinks  that  its 
establishment  (or,  if  the  term  "natural"  implies 
an  "original  state  of  things,"  the  re-establishment 
of  it)  would  increase  the  wealth  of  nations  greatly. 
It  is  not,  indeed,  essential  to  the  commercial  ambi- 
tion or  to  the  increase  of  wealth  through  it ;  in  spite 


LIBERTY,    EQUALITY,    FRATERNITY  7 

of  the  restraints,  progress  has  been  made;  in  fact 
the  results  of  the  commercial  ambition  itself  have 
often  been  the  means  of  removing  the  restraints 
on  it.  Adam  Smith  differs  from  Quesnay  on  this 
point.  And  it  is  not  anarchy,  either  in  a  good 
sense  or  a  bad,  that  he  desires;  he  retains  the  re- 
straints of  law  and  order.  He  even  wants  a  strong 
government  to  make  rights  secure.  If  the  "poli- 
tician" is  his  enemy,  associations  and  companies 
are  so  also.  Both  of  them  seem  to  him  to  have 
taken  away  the  rights  of  the  individual  man.  His 
claim  for  ''natural  liberty"  is  a  sort  of  Declara- 
ration  of  Independence  in  industry,  and  the  poli- 
tical analogy  is  not  far  from  his  mind;  he  speaks 
of  ''the  great  mercantile  republic"  and  of  the  va- 
rious countries  under  his  system  as  resembling  "the 
different  provinces  of  a  great  Empire."  His  units 
are  by  preference  individual  citizens  of  such  an 
empire,  well  established  in  their  legal  rights  and 
equal  in  their  privileges.  Plenty  of  good  land,  and 
liberty  to  manage  their  own  affairs  seem  to  him  the 
great  causes  of  progress  in  all  new  colonies,  and 
of  course  he  had  the  United  States  most  in  mind. 
You  will  observe  that  equality  is  also  regarded,  in 
this  statement.  The  liberty,  how^ever,  in  industry 
would,  he  says,  procure  equality  of  remuneration 
if  there  were  no  interference  from  institutions. 
Where  institutions  (and  conquest)  have  already 
supplied  a  man  with  privileges,  it  is  not  the  case 
that  equality  results;  witness  the  rents  of  land. 
But  the  interference  is  more  easily  taken  away  in 


8  DISTURBING   ELEMENTS 

the  case  of  capital  and  enterprise;  there,  therefore, 
equality  of  rate  of  profit  will  result,  from  liberty. 
There  may  not  be  equality  of  advantage  in  all 
bargains,  but  the  sense  of  injustice  will  be  re- 
moved. 

We  may  be  far  from  denying  those  propositions ; 
but  we  should  probably  alter  the  emphasis,  the 
insistence  on  liberty.  We  should  try  to  range  the 
conditions  coordinately.  But  due  coordination 
is  hard  even  for  a  modern  economist  who  thinks 
abstractly.  It  was  hard  for  a  metaphysician  like 
Descartes,  after  he  had  set  up  his  Cogito,  ergo  sum, 
and  was  trying  to  come  down  again  to  the  concrete 
world.  The  age  you  live  in  is  apt  to  fix  the  empha- 
sis for  you. 

An  English  writer  says  that  men  become  more 
discontented  the  more  freedom  they  have.  This, 
translated  into  the  language  of  economic  psycho- 
logy, means  that  men's  wants  are  enlarged  with 
every  fresh  degree  of  liberty  allowing  develop- 
ment of  them.  But  an  age  in  which  there  is  little 
liberty  is  likely  to  be  more  optimistic  than  our  own 
age,  because  progress  in  mere  liberty,  in  the  sense 
of  removal  of  restraints,  is  more  gross  and  pal- 
pable than  progress  in  other  directions,  say 
equality  of  opportunity.  The  optimism  of  Adam 
Smith  sometimes  astonishes  us.  He  is  quite  sure 
he  is  living  in  a  progressive  age.  Yet  the  condi- 
tion of  England  then  seems  to  us  now  far  from 
admirable.  Thorold  Rogers  put  the  Golden  Age 
in  the  fifteenth  century.    But  the  actual  increase 


LIBERTY,    EQUALITY,   FRATERNITY  9 

in  the  eighteenth  century  of  political  liberty  was 
not  doubtful,  and  the  steps  to  be  taken  toward  it 
were  tangible  and  evident.  Our  faith  in  progress 
now  is  more  worthy  of  being  described  as  a  faith. 
There  is  much  truth  in  Ruskin's  dictum  "Our 
efforts  are  inconstant  almost  in  proportion  to 
their  nobleness,"  though  it  is  well  for  us  to  forget 
the  instability  on  most  occasions  or  at  least  during 
the  battle.  The  obtaining  of  something  more 
than  political  liberty  is  our  own  problem.  A 
great  many  chains  have  been  knocked  off  since 
1776;  we  have  to  see  what  can  be  made  of  the  hu- 
man beings  thus  enfranchised.  Their  enfranchise- 
ment pre-occupied  Adam  Smith. 

His  ''classical"  successors  seem  at  first  to  have 
no  political  preoccupations.  They  are  often  de- 
scribed as  abstract  economists.  Nevertheless 
their  emphasis  was  determined  for  them  by 
Bentham's  political  maxims;  and  the  effect  was 
that  they  assumed  an  equality  of  units  where  it 
did  not  exist  and  was  not  very  evidently  coming. 
Equality  in  fact  was  their  preoccupation.  It  was 
not  Bentham  that  gave  to  this  idea  its  importance. 
As  the  course  of  events  in  America  led  to  the  pro- 
minence of  the  watchword  of  ''liberty"  in  Adam 
Smith's  days,  so  twenty  years  afterwards  the  course 
of  events  in  France  did  the  same  for  ''equality." 
The  attainment  of  equality  (except  so  much  of 
it  as  is  involved  in  liberty)  was  far  harder;  but  there 
is  no  doubt  of  the  existence  of  an  endeavour  after 
it  on  the  part  of  all  sympathizers  with  the  ideas 
of  the  Revolution. 


10  DISTURBING   ELEMENTS 

Bentham  formulated  this  idea  of  equality  in 
legal  language,  and  from  legal  language  and  the 
language  of  his  utilitarian  philosophy  it  passed 
into  economics.  This  is  a  commonplace;  but  per- 
haps the  whole  consequences  of  this  fusion  or  dif- 
fusion have  not  been  drawn  out.  Adam  Smith's 
aversion  to  associations  was  perhaps  due  to  practi- 
cal experience,  or  observation,  of  unfortunate  asso- 
ciations in  his  own  day  rather  than  to  his  principles. 
But  Bentham  may  be  said  to  have  supplied  a  basis 
for  the  aversion.  It  is  not  that  all  utilitarianism 
involves  it;  Malthus  was  a  utilitarian,  and  he 
shows  little  of  it.  But  it  is  involved  in  the  notion  of 
the  Greatest  Happiness  of  the  Greatest  Number 
interpreted  as  Bentham  interpreted  it; — each 
human  being  is  a  unit,  and  society  is  simply  the 
addition  of  such  units.  In  our  time  the  family 
is  more  often  taken  as  the  unit.  But  essentially, 
to  Bentham,  every  man  is  for  himself;  he  pursues 
his  own  pleasure,  and  his  is  worth  as  much  as 
another's.  It  was  as  if  Bentham  had  said  that,  to 
be  really  free  each  man  must  stand  alone;  and,  he 
would  like  to  have  added,  each  woman  also. 

Ratification  of  things  as  thej^  are  is  hard 
indeed  when  equality  is  the  requisite  regarded. 
But  it  was  thought  possible  in  a  measure,  because 
it  was  possible  to  abstract  from  all  differences. 
Bargainers  may  not  be  equal  otherwise,  but  in 
being  bargainers  they  are  alike;  they  are  equally 
alert  to  their  interest  or  must  be  presumed  to  be  so. 
The  economic  man  in  all  countries  is  in  this  re- 


LIBERTY,    EQUALITY,    FRATERNITY  11 

spect  supposed  to  be  the  same.  There  is  a  maxim 
of  the  school  of  Bentham,  ''Every  one  to  count 
as  one,  and  no  one  as  more  than  one" — made 
current  by  John  Mill.  Like  a  saying  to  which 
T.  H.  Green  gave  currency  as  from  Kant  (''The 
Understanding  makes  nature,  but  does  not  create 
it"),  the  quotation  has  not  been  traced  to  the  ear- 
lier author;  but  in  both  instances  the  maxim  seems 
pithily  and  truly  to  represent  the  mind  of  the  head 
of  the  school  expressed  by  a  disciple. 

It  is  the  atomic  theory  in  political  economy. 
The  atomic  theory  in  physics  is  now  in  danger; 
perhaps  in  social  philosophy  it  is  nearly  dead  now. 
But  to  Bentham  and  Ricardo  and  James  Mill  it 
was  by  no  means  dead.  The  rule  of  the  majority 
as  ascertained  by  addition  of  units  seemed  jus- 
tice, and  the  competition  of  economic  atoms  gave 
the  economic  situation.  The  same  idea  is  put 
forward,  in  very  old-fashioned  dress,  by  some  of 
those  who  would  break  up  trades  unions ;  they  in- 
sist that  enlightened  persons  recognize  only  the  se- 
parate atoms,  their  bargain  is  always  with  the 
separate  men. 

Economically,  Ricardo,  James  Mill,  and  J.  R. 
MaccuUoch  are  representatives  of  this  school  of 
economists.  Their  emphasis  lies  on  the  equality 
(or  identity)  of  the  economic  units.  Of  course 
in  any  profitable  sense  equality  takes  liberty  for 
granted.  An  equality  of  slavery  would  not  be  of 
much  economical  value.  Those  men  undoubtedly 
include  in  their  programme  the  liberty  advocated 


12  DISTURBING   ELEMENTS 

by  Adam  Smith;  they  are  political  reformers  in 
this  sense  also.  But  the  claim  for  equality  was 
less  generally  conceded,  and  therefore  they  insist 
on  it  more.  The  equality  is  like  Adam  Smith's 
liberty,  negative  in  character.  Remove  obstruc- 
tions and  men  are  free;  remove  their  differences 
they  are  equal.  Unfortunately,  though  you  can 
do  both  in  thought,  it  is  even  less  easy  to  do  the 
latter  in/acUhan  the  former;  and,  though  the  politi- 
cal effect  of  Bentham's  teaching  was  of  a  levelling 
character,  the  economical  was  sometimes  quite 
otherwise.  It  meant  the  survival  of  the  econom- 
ically strongest  among  those  all  equally  compet- 
itors but  not  at  all  equal  in  the  competition. 
This  would  be  true  even  where  the  liberty  in  the 
negative  sense  was  perfect,  a  state  of  things  never 
realized,  though  more  nearly  approached  now 
than  formerly. 

The  men  who  from  the  first  felt  the  inadequacy 
of  the  negative  idea  both  of  liberty  and  equality 
were  the  social  reformers.  Malthus  himself  was 
one  of  these.  Adam  Smith,  though  he  is  said  to 
have  taken  an  interest  in  Sunday  schools,  had  no 
passion  for  social  reformation,  but  rather  the 
intellectual  interest  of  the  philosopher  and  observer. 
That  he  was  a  respectable  patriot  and  took  great 
interest  in  la  haute  politique  b^'-  no  means  disproves 
the  general  contention.  Malthus,  on  the  contrary, 
had  a  touch  of  the  enthusiasm  of  humanity,  and  the 
distresses  of  the  poor  haunted  him.  Hence  his 
efforts  to  find  a  way  of  escape  from  the  appar- 


LIBERTY,   EQUALITY,    FRATERNITY  13 

ent  consequences  of  his  own  theory  of  population, 
efforts  not  entirely  unsuccessful.  He  broke  away 
from  what  he  called  the  New  School  of  Political 
Economy  for  adequate  reasons  given,  affecting 
cost,  supply  and  demand,  and  rate  of  profits; 
but  it  is  possible  there  was  a  half-conscious  revolt 
in  his  mind  against  principles  more  fundamental. 
His  unit  was  rather  the  family  than  the  individual, 
though  he  never  confessedly  broke  with  the  older 
principle  of  individual  liberty  as  Adam  Smith 
stated  it. 

The  school  of  Bentham,  we  are  told,  put  ''Mal- 
thus  on  population"  in  the  forefront.  But  here 
again  their  idea  was  negative.  Population  must  be 
restricted.  The  improvement  of  the  standard  of 
living  is  the  positive  side  of  the  matter,  and  it  is  the 
side  preferred  by  the  maturer  Malthus.  It  means 
more  than  restriction,  though  restriction  is  involved 
in  it.  But  the  idea  of  the  Benthamites  was  that, 
by  keeping  down  the  number  of  units  you  increased 
their  value  and  ability  to  find  food.  They  laid 
the  emphasis  on  restriction.  The  followers  of 
Owen  and  of  St.  Simon  were  led  away  from  the 
individual  to  magnify,  perhaps  unduly  and  pre- 
maturely, the  virtues  of  association.  It  is  curious 
that  Malthus,  Ricardo  and  Bentham  himself  are 
all  found  among  the  patrons  of  Robert  Owen,  and 
not  only  of  Robert  Owen  the  benevolent  despot 
and  employer  and  capitalist  of  New  Lanark,  but 
of  Owen  when  he  was  beginning  to  develope  his 
New  View  and  new  views.     That  they  dropped 


14  DISTURBING   ELEMENTS 

him  is  not  unnatural;  many  reasons  could  be  found 
for  dropping  the  full-fledged  Robert  Owen; — 
but  they  may  have  had  an  inkling  that  this  man 
had  something  which  their  own  theories  wanted. 

The  course  of  economics,  however,  was  not  di- 
rectly influenced  either  by  Owen  or  the  French 
speculators.  John  Stuart  Mill  was  the  writer  who 
induced  economists  to  recognize  that  more  than 
their  bare  liberty  and  equality  was  needed,  not 
only  to  rejuvenate  society,  but  even  to  give  a 
full  account  of  the  economic  situation.  If  we  are 
right  in  speaking  of  liberty  and  equality  as  the  two 
watchwords  that  had  most  influence  in  the  two 
first  stages  of  economic  doctrine,  then  fraternity 
mast  be  recognized  as  having  a  great  share  in  the 
moulding  of  the  doctrine  in  its  third  stage. 

Even  if  John  Stuart  Mill  keeps  the  main  features 
of  the  classical  economists  in  his  political  economy, 
he  does  not,  like  his  father,  erect  political  economy 
into  a  political  philosophy.  He  sees  the  very 
different  features  of  society  that  modify  the  con- 
clusions of  economics  as  soon  as  concrete  applica- 
tion is  attempted.  Political  economy  is  to  him 
part  of  a  sovereign  social  science,  but  it  is  not  itself 
the  social  science.  If  the  laws  of  production 
seem  to  him  little  affected  by  human  will,  the 
laws  of  distribution  seem  very  much  so  affected. 
Even  population  which  comes  under  the  head  of 
production  is  not  left  unmodified  by  human  will; 
Malthus  (Mill  said),  instead  of  shutting  the  door 
to  human  progress,  had  really  for  the  first  time 


LIBERTY,    EQUALITY,   FRATERNITY  15 

opened  it.  But  the  idea  of  fraternity  appears 
to  sway  Mill  most  in  his  dealings  with  distribution 
and  especially  the  various  schemes  for  a  better 
distribution  than  the  present.  Those  schemes  with 
which  he  is  most  in  sympathy  involve  association 
in  one  shape  or  another.  There  are  no  doubt 
two  apparently  conflicting  tendencies  at  work  in  his 
mind,  his  father's  views  and  the  new  views  he  had 
learned  from  the  French  writers  of  his  early  man- 
hood, not  only  Utopians  like  St.  Simon  and  sociolo- 
gists like  Comte,  but  historians  like  Guizot  and 
De  Tocqueville.  The  historical  method  was  grow- 
ing up  and  Mill's  mind  leaped  to  it.  It  is  curious 
that  it  plays  so  small  a  part  in  his  Representa- 
tive Government.  The  E>says  on  Liberty  and  on  the 
Subjection  of  Women  also  stand  out  by  themselves, 
unaffected  by  this  change  in  his  thought.  He  sel- 
dom tried  to  rewrite  his  old  books  when  he  made 
new  discoveries  or  advanced  from  one  thought  to 
another.  Perhaps,  like  Ricardo,  he  found  the 
publishers  a  formidable  obstacle  to  the  rewriting 
of  first  books.  His  changed  views  on  the  wages 
fund,  expressed  in  a  magazine  article,  are  withheld 
from  the  readers  of  the  Political  Economy.  Some  of 
his  later  books  could  almost  be  taken  as  criticisms 
of  the  earlier.  His  socialistic  leanings  and  his 
homage  to  the  historical  method  are  hardly  to  be 
traced  at  all  in  the  essay  on  Liberty.  In  that  essay 
the  evil  in  the  domination  of  public  opinion  is 
brought  out  far  more  emphatically  than  the  good  in 
it.     It  may  have  been  that  the  two  tendencies  were 


16  DISTURBING   ELEMENTS 

equally  balanced  in  his  own  mind,  towards  ortho- 
doxy and  towards  revolution.  We  hear  from  him  in 
the  Political  Economy  that  the  classical  economists 
have  not  allow.ed  enough  force  to  the  socialistic 
criticisms  of  competitive  commerce  and  also  that 
the  socialists  have  never  fully  understood  the  vir- 
tues of  competition. 

Yet  as  economists  we  must  judge  him  by  his 
whole  Political  Economy;  and,  coming  where  it 
does  in  the  Political  Economy,  the  indulgent  view 
of  Utopian  schemes  shows  distinctly  that  he  wished 
to  introduce  their  associative  principles  into  the 
body  of  economic  doctrine.  He  has  so  persuasively 
introduced  them  that  they  cannot  now  be  dislodged. 
No  economic  students  would  now  be  satisfied  with 
a  text  book  that  said  nothing  of  socialism  or  co- 
operation. Small  wonder  that  Mill  should  have 
done  this  service,  seeing  in  his  view  the  pro- 
blem of  the  future  was  '^how  to  unite  the  greatest 
individual  liberty  of  action  with  a  common  owner- 
ship in  the  raw  material  of  the  globe  and  an  equal 
participation  of  all  in  the  benefits  of  combined 
labour."  These  were  his  and  Mrs.  Taylor's  opin- 
ions, and  we  know  how  that  lady  seemed  to  him  to 
mould  his  thoughts. 

It  is  a  fairly  safe  conclusion  that  the  ideas  not 
only  of  liberty  and  equality,  but  of  fraternity,  will 
always  be  with  us,  and  we  may  thank  Mill  for 
securing  to  the  last  its  entree  into  the  good  society 
of  political  economists. 

This  may  be  as  it  ought  to  be.    Yet  the  idea 


LIBERTY,    EQUALITY,   FRATERNITY  17 

of  fraternity  is  not  even  so  clear  as  the  other  two 
ideas,  liberty  and  equality.  Our  present  notion  of 
liberty,  that  has  been  gradually  forming  itself 
in  the  last  twenty-five  years,  is  of  the  command  of 
opportunity  for  development  rather  than  the  con- 
fronting of  a  cleared  course  where  all  obstacles 
are  removed.  It  is  positive,  not  simply  negative. 
In  the  same  way  our  notion  of  equality  is  of  equal 
opportunity.  Is  our  notion  of  fraternity  to  be  that 
of  mutual  aid  in  self-development  as  well  as  mutual 
aid  in  the  development  of  material  resources? 
Instead  of  answering  this  question  directly,  we 
may  look  for  a  moment  at  the  rejoinder  to  Mill's 
Liberty  put  forward  by  James  Fitzjames  Stephen 
under  the  title  of  ^Liberty,  Equality,  Fraternity^ 
(1873).  The  preface  is  dated  March  thirty-first 
and  Mill  may  never  have  read  it,  as  he  died  on 
May  eighth  of  the  same  year.  The  book  is 
written  rapidly  in  a  conversational  style;  but  it 
is  the  style  of  the  conversation  of  a  great  lawyer 
accustomed  to  weigh  his  words  even  when  utter- 
ing them  rapidly,  and  well  equipped  by  a  busy 
life  and  large  experience  with  facts  and  princi- 
ples. Mill  had  known  India  only  by  being  in 
the  India  Office;  Stephen  had  taken  part  in  the 
actual  government  of  India  on  the  spot.  Stephen 
may  be  conceived,  just  on  that  account,  to  have 
a  slight  bias  towards  Satrapian  heresies  in  poli- 
tics, especially  towards  "a  policy  of  resolute  coer- 
cion." But  he  knew  England  also;  and  we  must 
take  his  arguments  as  we  find  them. 


18  DISTURBING   ELEMENTS 

Mill  had  not  been  content  with  such  ''liberty" 
as  would  have  satisfied  Adam  Smith  and  Bentham. 
He  has  still  a  negative  notion,  removal  of  coer- 
cion; but  it  goes  farther  than  theirs.  The  public 
authorities  (he  says)  must  not  only  secure  to  a 
man  his  property  and  his  vote,  but  they  must 
take  care  not  to  control  the  individual  at  all  except 
where  his  actions  restrict  or  injure  others;  they 
must  not  control  him  for  his  own  good.  Self- 
protection  is  to  be  the  only  ground  of  interference. 
Public  o'pinion,  too,  should  recognize  its  limita- 
tions and  the  virtue  of  free  discussion  for  the  at- 
tainment of  truth.  Without  discussion  actual  or 
possible  there  is  no  assured  truth,  in  Mill's  judg- 
ment. At  present  ''custom  lies  upon  us  with  a 
weight  heavy  as  frost  and  deep  almost  as  life." 
Public  opinion  depresses  originality  by  condemning 
eccentricity.  But  for  the  sake  of  its  own  pro- 
gress society  should  leave  the  individual  free  and 
rather  encourage  eccentricity  than  hinder  it.  The 
same  claim  is  to  be  made  for  combinations  of  men; 
they  should  have  the  same  liberty,  liberty  especi- 
ally to  innovate. 

Now  the  essay  on  Liberty  is  not  an  economic 
treatise,  and  its  economic  examples  are  few. 
Much  of  the  essay  deals  with  subjects  not  open  to 
cm  discussion  here.  The  virtue  of  free  discussion 
is  at  least  as  undoubted  bj^  the  wise  in  regard  to 
economic  subjects  as  anywhere  else;  and  persecu- 
tion is  not  unknown  in  this  region.  The  opposition 
to  innovations  in  matters  economical  has  come 


LIBERTY,   EQUALITY,    FRATERNITY  19 

perhaps  rather  more  from  vested  interests  than 
from  the  weight  of  custom,  though  in  old  countries 
the  cultivators  are  notoriously  slow  to  listen  to  im- 
provements. Modern  civilized  nations,  say,  the 
United  States,  England,  Germany,  have  taken 
keen  interest  in  novelties  like  marconigrams,  auto- 
mobiles, and  air-ships.  The  greatest  difficulty  has 
not  been  in  public  opinion.  The  desire  to  hear  and 
to  tell  ''some  new  thing''  is  not  peculiar  to  the 
Athens  of  Paul  and  Demosthenes.  Mill  rather 
exaggerates  the  opposition  of  public  opinion  to 
innovation. 

Stephen  makes  light  of  this  aspect  of  Mill's 
view,  and  concentrates  his  fire  on  the  definition. 
Freedom,  to  Mill,  is  the  removal  of  coercion;  but 
in  Stephen's  opinion  the  removal  of  obstacles 
(which  he  is  inclined  to  treat  as  the  same  thing) 
does  not  encourage  originality;  (as  Malthus  said) 
it  is  difficulties  that  generate  talents,  and  a  disci- 
plined youth  is  likely  to  be  more  original  than  a 
youth  never  subjected  to  tutors  and  governors. 
Economically  we  should  not  care  to  push  this 
doctrine  far,  so  far  at  least  as  deliberately  to  leave 
difficulties  in  the  way.  Nature  will  provide  and 
leave  plenty  of  them;  and  we  must  not  become 
Luddites  in  spirit  and  leave  evil  standing  that  good 
may  come  of  it.  On  the  other  hand,  we  may 
agree  with  Mill  that  freedom  must  be  left  to  com- 
binations of  men  where  they  are  not  injuring  the 
public;  yet  must  remember  that  there  may  be  no 
more  mischievous  coercion  than  that  exercised  by 


20  DISTURBING   ELEMENTS 

a  successful  combination,  a  coercion  not  physical 
merely  but  ''moral "  or  of  the  spirits  of  men.  The 
question  is  whether  their  coercion  of  the  individual 
is  a  greater  evil  than  the  freedom  of  the  combina- 
tions is  good,  good  from  the  point  of  view  not  of 
the  sectional  interest  of  the  combination,  or  of  the 
single  interest  of  the  individual,  but  of  the  whole 
community  represented  in  the  State.  The  answer 
may  be  made  that  the  best  general  rule  for  the 
State  is  not  to  restrict  the  action  of  the  combina- 
tions where  physical  compulsion  is  not  used;  and 
yet  that  general  principle  must  give  way  to  obvious 
general  benefit,  even  at  the  sacrifice  of  the  "liberty 
of  the  subject"  to  do  himself  harm.  Prohibition 
and  local  option  are  certainly  against  Mill's  prin- 
ciples, and  so  is  the  punishment  of  would-be  sui- 
cides. 

Stephen's  position  is  "that  the  essence  of  life  is 
force,  and  force  is  the  negation  of  liberty"  (as  if 
the  force  could  not  be  asserted  against  material 
nature).  It  is  that ''the  rule  of  the  strongest"  is 
always  a  correct  description  of  government  even 
now,  however  veiled  the  pressure  of  the  strength 
may  be;  and  every  government  believes  itself  wiser 
than  the  governed  and  rightly  imposes  its  wisdom 
on  them;  in  fact,  that  at  the  back  of  all  individual 
liberty  is  the  coercion  of  Government;  and  (he 
goes  on)  the  test  of  the  goodness  of  its  policy  in  a 
given  case  is  not  to  be  any  abstract  principle  of 
liberty  but  a  proved  advantage  or  disadvantage 
of  the  course  pursued  and  the  probability  or  ira- 


LIBERTY,    EQUALITY,    FRATERNITY  21 

probability  of  successfully  pursuing  it.  The  last 
item,  perhaps,  saves  the  situation  for  us.  Sump- 
tuary laws  have  a  good  object,  but  they  cannot  be 
carried  out.  Morality  cannot  be  forced  on  a  peo- 
ple, though  outward  conformity  may  (and  may 
rightly)  be.  Provost  Keate's  saying,  ''Boys,  if  you 
are  not  pure  in  heart,  I'll  flog  you,"  is  laughable 
wherever  understood.  Most  of  all  this  is  com- 
monplace to  us  now;  but  some  of  us  will  think  that, 
by  advancing  it,  Stephen,  if  he  refuted  Mill,  did 
not  refute  those  who  contend  for  a  liberty  that 
means  access  to  opportunity  for  self-development. 
The  next  question  is  really  that  of  Equality. 
For  whom  did  Mill  claim  that  liberty?  He  claimed 
it  for  all  human  beings,  mature,  and  sane,  and 
civilized.  There  was  to  be  no  distinction  of  rank, 
property,  colour,  or  sex.  Here  his  essay  on  the 
Subjection  of  Wo?7ien  supplements  his  essay  on 
Liberty.  There  is  an  extension  of  the  equality 
preached  by  Bentham.  Bentham  himself  held 
the  same  view,  but  never  brought  it  into  the  fore- 
ground. As  we  all  know,  it  is  coming  into  the 
foreground  now.  Economically  the  question  is 
not  to  be  taken  as  settled  by  the  circumstance  that 
factory  acts  take  not  only  children  but  women 
under  their  protection.  It  might  quite  well  be 
held  that  if  women  had  had  the  making  of  the 
laws  the  protection  might  have  been  secured  bet- 
ter, or  at  least  otherwise.  Stephen's  attitude 
is  again  hostile,  but  on  grounds  that  do  not  con- 
cern us  here,  of  physical  weakness  mainly.     The 


22  DISTURBING  ELEMENTS 

success  of  women  in  their  present  agitation  is 
likely  to  have  appreciable  effects  on  industrial 
economy.  It  would  seem  as  if  the  watchword 
"equality"  had  not  spent  its  force  altogether, 
in  those  quarters. 

Much  commonplace  exists  on  ''equality";  it 
is  easy  to  prove  that  men  are  not  equal,  in  what 
is  called  the  plain  meaning  of  the  word.  If  equ- 
ality means  sameness  or  identity,  absence  of  differ- 
ence or  of  superiority  or  inferiority,  then  we  all 
know  it  does  not  prevail.  Economically  such  an 
equality  would  deprive  the  modern  doctrine  of  value 
of  a  great  deal  of  its  point.  Exchange  could  hardly 
be  what  it  now  is,  nor  could  interest  on  capital. 
But  the  matter  is  not  worth  an  argument.  Those 
to  whom  ''equality"  was  a  watchword  never 
meant  that  all  for  whom  they  claimed  it  should 
be  held  alike  in  every  particular.  What  was  most 
in  the  minds  of  the  American  patriots  and  French 
Kevolutionaries  was  social  equality.  So  far  as  it 
now  means  anj'-thing  but  impartial  treatment  in 
the  laws  and  by  the  administrators  of  the  law,  it  is 
bound  up  with  "liberty."  Whatever  be  our 
notion  of  liberty,  the  said  liberty  is  usually  claimed 
by  us  as  a  boon  to  be  extended  to  all  citizens  im- 
partially, liberty  involving  in  the  first  place  that 
all  subjects  should  be  citizens. 

A  large  part  of  the  civilized  world  has  withheld 
this  privilege  from  certain  men  because  of  th'eir 
colour.  The  negro,  the  American  Indian,  the  East 
Indian,  the  Chinese,  the  Kaffir,  may  be  subjects 


LIBERTY,    EQUALITY,    FRATERNITY  23 

without  being  citizens,  really  or  nominally.  Eco« 
nomically  the  position  of  those  men  in  our  several 
countries  is  very  different  when  equality  and  lib- 
erty are  conceded  and  when  they  are  withheld. 
They  are  withheld  really  if  not  nominally  by  all 
the  white  races  except  the  English  and  given  by 
the  English  only  where  the  coloured  people  are  a 
tiny  fraction  of  the  whole  people,  chiefly  in  Eng- 
land itself.  Can  we  say  it  is  because  they  are  not 
mature  or  civilized? 

Mill's  reservation  is  quite  sound,  but  we  should 
all  see  to  it  that  when  the  coloured  people  are 
mature  and  civilized  they  should  have  the  rights, 
now  accrued.  The  general  dictum  "liberty  and 
equality"  has  not  led  many  of  us  in  this  direc- 
tion, and  my  own  countrymen  have  been  no  ex- 
ception to  the  rule. 

It  might  conceivably  be  replied  that  the  three 
watchwords  go  together,  and  we  give  liberty  and 
equality  to  men  with  whom  we  can  have  fraternity. 
Stephen  sums  up  very  well  what  appears  to  be 
Mill's  view:  ''If  men  are  all  freed  from  restraints 
and  put  as  far  as  possible  on  an  equal  footing,  they 
will  naturally  treat  each  other  as  brothers  and 
work  together  harmoniously  for  their  common 
good."  It  is  easy  with  Stephen  to  give  this  a 
direct  negative;  but  Mill's  view  applies  not  to 
savages  or  even  to  the  Philistine  world  of  a  money- 
getting  bourgeoisie  but  to  the  new  world  of  modern 
civilization.  Is  it  not  the  case  on  the  whole  that 
public  spirit  is  found  oftener  and  that  men   are, 


24  DISTURBING   ELEMENTS 

more  of  them,  more  willing  and  even  anxious  to 
do  something  for  their  neighbours  now  than  for- 
merly? Stephen  mocks  at  the  idea  that  we  can, 
in  the  full  sentimental  sense,  love  our  neighbour,  or 
that  it  is  good  we  should  do  so.  It  is  unlikely 
that  the  sentiment  was  in  Mill's  mind,  but  rather 
the  good-will,  which  means  the  will  to  do  good 
to  others.  In  this  sense,  fraternity  increases  with 
all  true  civilization. 

Elsewhere  in  human  affairs  we  have  often  to 
work  not  upwards  from  the  less  to  the  greater  but 
downwards  from  the  greater  to  the  less;  we  have 
first  to  secure  the  greater  which  includes  the  less. 
It  is  the  way  of  the  best  religions  and  of  many 
political  and  social  movements  besides.  It  was 
the  supposed  condition  on  which  natives  might 
receive  the  franchise  in  Cape  Colony  that  they  were 
found  on  due  scrutiny  to  be  "civilized,"  e.g.,  in 
house  and  household  ways.  The  same  idea  can  be 
carried  out  in  various  directions.  This  is  one — 
that  the  appeal  to  common  sympathy  is  a  claim  for 
a  union  of  men  in  which  as  of  course  every  one  has 
his  liberty  and  equal  treatment.  The  ''frater- 
nity" need  not  be  a  religion  of  humanity.  That 
we  are  fellow  members  need  not  involve  the  feel- 
ing that  we  are  members  one  of  another.  The 
French  Revolutionaries  were  not  very  successful 
in  appealing  in  their  way  to  a  common  humanity 
and  furthering  fraternity  by  force.  But  in  our 
own  time  social  bonds  are  becoming  tighter,  and  in 
a  very  large  proportion  of  social  problems  groups 


LIBERTY,    EQUALITY,   FRATERNITY  25 

are  becoming  more  important  than  individuals. 
Stephen  says:  '' Whoever  first  gave  the  command 
or  uttered  the  maxim,  '  Honour  thy  father  and  thy 
mother,  that  thy  days  may  be  long  in  the  land,'" 
had  a  far  better  conception  of  the  essential  con- 
ditions of  permanent  national  existence  and  pros- 
perity than  the  author  of  the  motto,  'Liberty, 
equality,  and  fraternity.'  "  This  is  fine,  but  not 
fair  to  the  motto.  Fraternity  and  the  family  are 
not  exclusive  of  one  another.  Stephen's  mot 
reminds  us  of  the  kindred  exaggeration  in  Gulli- 
ver's Travels:  "The  King  of  Brobdingnag  gave 
it  for  his  opinion  that  whoever  could  make  two 
ears  of  corn  or  two  blades  of  grass  to  grow  upon  a 
spot  of  ground  where  only  one  grew  before  would 
deserve  better  of  mankind  and  do  more  essential 
service  to  his  country  than  the  whole  race  of  poli- 
ticians put  together."  We  are  forty  years  away 
from  those  worthies,  J.  S.  Mill  and  James  Fitzjames 
Stephen,  and  the  perspective  has  shifted  a  little. 
We  do  not  now  regard  J.  S.  Mill's  as  the  last  word 
on  economics,  perhaps  not  even  the  best  that 
could  be  yielded  by  the  old  premises.  The 
classical  school  laid  the  foundations  and  other  men 
have  biiilded  on  them,  buildings  that  would  some- 
times have  surprised  them  very  much.  How  far 
do  they  seem  to  have  built  to  the  music  of  the 
three  watchwords? 

The  answer  will  be  different  according  as  we 
understand  by  Economics  an  analysis  or  a  policy. 
It  might  be  thought  that  economic  analysis  has 


26  DISTURBING   ELEMENTS 

done  best  when  it  has  tried  to  be  deaf  to  such 
music.  The  analysis  of  Marx  is  hardly  deaf  to  it 
or  Marx  would  have  been  more  critical  in  his 
acceptance  of  certain  doctrines  of  Ricardo.  If  a 
man  shows  an  interested  motive  for  his  conclu- 
sions, you  cannot  have  whole-hearted  confidence 
in  his  reasonings ;  in  fact  you  will  have  an  interested 
motive  for  doubting  them.  The  analysis  of  value, 
the  terminal  workman  (' 'terminal  Bill"  as  the 
Cambridge  students  call  him),  final  utility  in  gen- 
eral, exchange  of  present  for  future  goods,  would 
seem  to  have  nothing  to  do  with  what  ought  to  be, 
but  simply  with  what  is.  This  is  true;  but  the 
watchwords  are  of  service  to  us  in  reminding  us 
that  we  are  every  day  dealing  with  distinctions 
that  may  possibly  shift.  It  matters  a  great  deal 
even  for  victorious  analysis  whether  the  human 
agents  on  the  economic  field  are  free  and  in  what 
degree  they  are  so,  how  many  and  how  great 
restrictions  have  hampered  their  economic  action 
and  how  few  and  how  small.  It  matters  also 
whether  the  groups  of  men  are  groups  of  units 
equally  hampered  or  not  equally.  It  matters 
finally  whether  they  are  deliberate  in  combination 
or  not,  and  in  what  closeness  of  combination,  in- 
terfering perhaps  with  freedom  while  it  increases 
power.  This  is  true  even  of  theoretical  econo- 
mics, which  can  never  be  so  abstractly  theo- 
retical as  not  to  include  in  its  theory  the  differ- 
ences of  typical  groups  actually  found  in  indus- 
trial society.     We  are,  after  all,  analysing  indus- 


LIBERTY,   EQUALITY,   FRATERNITY  27 

trial  society  as  we  find  it,  not  as  we  might  conceive 
it  to  be;  the  motives  we  detach  in  the  first  instance 
in  our  abstract  theory  are  actually  present, 
though  not  in  detachment.  The  analysis  of  "col- 
lective bargaining,"  and  of  the  kind  of  bargains 
resulting  from  monopolies  founded  on  ''nature" 
and  monopolies  created  by  such  associations  as 
Trusts  or  such  proceedings  as  ''cornering,"  may 
perhaps  proceed  more  carefully  if  the  thi^ee  watch- 
words are  kept  in  mind,  kept  in  mind  however,  as 
categories,  not  employed  as  categorical  imperatives. 
Economic  policy,  on  the  other  hand,  proceeds 
by  them  largely,  even  without  our  knowledge. 
On  the  American  continent  including  Canada, 
economic  policy  goes  on  its  way  somewhat  fitfully 
with  occasional  interruptions  from  within,  not 
many  from  without.  In  the  old  world  there  is  a 
perpetual  interruption  from  without,  in  the  panic 
fear  of  war  and  the  real  or  supposed  need  of  pre- 
parations for  defence.  This  involves  a  taxation 
of  which  America  has  no  experience  as  yet.  The 
taxation  if  not  haphazard  must  try  to  be  eco- 
nomically directed.  It  will  then  be  directed  by 
principles  not  altogether  alien  to  those  three 
watchwords;  we  should  interfere  as  little  as  may 
be  with  the  liberty  and  equality  of  our  citizens  and 
disturb  as  little  as  may  be  their  sense  of  political 
union  and  unity.  The  canons  of  taxation  must  not 
be  considered  at  this  point.  What  is  to  be  con- 
sidered now  is  rather  more  general;  we  must  not 
by  taxes  cause  political  oppression  and  disturb- 


28  DISTURBING   ELEMENTS 

ance  of  the  political  balance,  though  we  must  try 
to  put  the  burden  on  the  strongest  back.  The 
watchword  of  fraternity  may  perhaps  specially 
remind  us  that  legislation  afTects  groups  as  well  as 
individuals,  and  in  certain  cases  the  legislator 
ought  to  do  what  he  can  to  organize  the  groups.  In 
any  case  the  sense  of  political  unity  must  be  rein- 
forced. 

Economic  fraternity,  a  cosmopolitan  union  of 
industries,  is  an  idea  peculiarly  modern.  It 
would  apply  specially  to  the  international  char- 
acter of  certain  great  trades,  and  an  increasing 
number  of  them.  All  foreign  trade  may  seem  to 
make  for  fraternity;  but  some  foreign  trades  have 
already  become  international.  The  money  mar- 
ket is  quite  as  much  international  as  national. 
On  the  whole  economic  interests  tend  to  make  all 
trades  so,  although  protectionism  puts  obstacles 
in  the  way.  More  than  the  money  market  is 
now  international.  The  trade  in  grain  and  in  the 
precious  metals  and  even  all  minerals  has  become 
so,  or  at  least  far  more  so  than  in  the  days  of  Mill, 
to  say  nothing  of  Ricardo  and  Adam  Smith.  It 
is  a  sort  of  fraternity,  and  implies  a  liberty  and 
equality  of  its  own.  As  love  laughs  at  locksmiths, 
so  has  the  trading  interest  overleaped  barriers. 
The  entire  disappearance  of  protection  will  prob- 
ably be  caused  by  the  sense  of  fraternity  or  desire 
for  universal  peace,  rather  than  the  peace  be  intro- 
duced by  the  free  trade.  This  is  another  instance 
of  what  was  mentioned  before,  the  adoption  of  the 


LIBERTY,   EQUALITY,    FRATERNITY  29 

greater  change  bringing  with  it  the  adoption  of  the 
less. 

Without  fraternity  in  the  form  of  organization 
of  smaller  groups  than  nations,  it  will  be  difficult 
to  preserve  what  was  long  the  most  precious  fea- 
ture of  the  economic  world  in  English-speaking 
America, — the  independent  labourer.  There  is 
some  sacrifice  of  individual  self-reliance  in  the 
older  countries.  In  the  new,  the  access  to  fertile 
land  and  homesteads .  may  keep  up  the  individual 
self-reliance  for  sometime  yet.  It  means  a  stronger 
sense  of  liberty  and  equality,  perhaps  a  little  less 
of  the  fraternity;  yet,  for  full  use  of  modern  appli- 
ances even  by  the  farmer,  a  conscious  union  with 
his  fellow  citizens  and  with  the  State  that  is  over 
them  and  him  must  be  present  too.  What  is  most 
earnestly  to  be  desired  for  both  of  you,  both  Can- 
ada and  the  United  States,  if  it  is  not  too  late  for 
the  latter,  is  that  the  independent  worker  should 
remain  the  typical  figure  in  the  Nation.  With 
due  care  and  pains  on  the  part  of  both  of  you  there 
need  not  be  any  proletariate  at  all.  Without  the 
due  care  and  pains  that  proletariate  will  come. 
In  a  proletariate  there  is  little  liberty  and  little 
true  fraternity;  there  is  something  like  an  equality 
of  suffering  and  degradation.  If  the  watchwords 
would  keep  us  mindful  of  this  great  duty,  it 
would  be  well  to  hear  their  music  every  day,  even 
in  our  study. 


Lectuee  II 

"GOVERNMENT  IS  FOUNDED  ON 
OPINION" 

It  has  appeared  that  even  the  watchwords  of 
agitators  may  sometimes  serve  the  economist 
pathologically  in  good  stead.  He  may  use  them, 
as  reminders  to  himself  that  his  bow  needs  to  be 
bent  the  opposite  way;  he  may  repeat  the  watch- 
word that  suggests  that  way.  No  one  watchword 
can  guide  us  in  all  cases,  unless  it  is  a  uselessly 
broad  truism  hke  ''duty  before  pleasure,"  which 
admits  of  almost  any  interpretation  we  like  to 
put  upon  it. 

There  are  maxims  of  another  kind  that  are  of 
no  private  interpretation'  and  make  no  appeal  to 
the  emotions.  They  are  the  more  useful  on  that 
account.  Sach  are  the  sayings  of  authors  half 
forgotten,  or  (which  is  not  the  same  thing)  whose 
works  are  half  forgotten.  One  of  these  sayings 
is  that  of  David  Hume  that  "Government  is 
founded  on  Opinion."  ''Nothing  (he  says)  is 
more  wonderful  than  the  ease  with  which  the  many 
are  governed  by  the  few,  and,  as  force  is  always 
on  the  side  of  the  governed,  the  governors  have 
nothing  to  support  them  but  opinion,  even  under 
a  despotism."    We  need  not  confine  ourselves  to 


GOVERNMENT  IS  FOUNDED   ON     OPINION        31 

Hume's  analysis  of  this  opinion  (it  is  to  him  an 
opinion  of  self  interest,  an  opinion  of  rightfulness, 
right  to  power  and  right  to  property).  The  gen- 
eral position  is  enough.  People  saj'  all  Government 
depends  on  Force,  but  this  Force  will  be  found  to 
depend  on  Opinion,  on  the  Mind  of  the  Governed. 
In  this  sense  all  government  is  democratic. 

This  is  Political  Philosophy,  not  Political  Econo- 
my, but  the  dictum  will  be  found  to  have  some 
meaning  in  regard  to  the  economical  system. 
The  economical  system  of  any  people  (and  the 
system  of  the  civilized  peoples  now,  regarded  as 
one)  is  founded  not  frankly  on  physical  force  but 
in  great  part  on  the  assent  or  consent  of  the  gov- 
erned. To  use  an  expression  of  commercial  law 
there  are  implied  warranties;  and  the  economic 
opinion  on  which  the  economic  system  is  founded  is 
the  total  of  the  implied  warranties.  You  remem- 
ber the  struggle  of  John  S.  Mill  to  reach  a  defini- 
tion of  Political  Economy.  He  at  last  defines  it  as 
''the  science  which  traces  the  laws  of  such  of  the 
phenomena  of  society  as  arise  from  the  combined 
operations  of  mankind  for  the  production  of  wealth 
in  so  far  as  those  phenomena  are  not  modified  by 
the  pursuit  of  any  other  object."  This  means 
that  the  distinctive  character  of  the  subject 
involves  a  social  element.  Not  only  some  but  all 
of  its  categories  are  in  a  sense  social.  So  too  an 
economic  system  implies  a  society  of  some  kind; 
and  a  society,  as  such,  is  not  held  together  by  brass 
collars  but  by  spiritual  bonds  going  beyond  con- 


32  DISTURBING   ELEMENTS 

tracts  written  or  verbal.  A  group  of  convicts  is 
not  a  society;  and  the  intellectual  element  is  essen- 
tial. There  is  nothing  good  or  bad  in  social  union 
but  thinking  makes  it  so. 

)Some  of  the  bonds  are  evident  and  familiar. 
It  is,  or  ought  to  be,  a  commonplace  that  without 
honesty  there  is  no  sound  economy.  There  must 
be  mutual  trust  to  hold  even  a  band  of  robbers 
together.  Without  adhesion  to  the  general  will 
there  is  no  cohesion  of  the  economic  system; 
with  it,  even  a  bad  economic  system  may  last  a 
provokingly  long  time.  The  two  extremes  may 
be  {a)  absolute  trust  without  book,  record,  or 
witness; — there  is  still  a  store  of  the  Hudson's 
Bay  Company  north  of  Winnipeg  where  the  In- 
dians are  said  to  help  themselves,  leaving  the  right 
furs  in  exchange,  neither  deceiving  nor  deceived; 
— and  (6)  absolute  distrust  as  of  Ishmael,  in  the 
state  of  barbarism  described  by  Hobbes  in  the 
phrase  helium  omnium  contra  omnes.  Though 
Hobbes  makes  this  state  of  things  the  starting 
point  of  human  politics,  it  is  really  harder  to  find 
than  the  other,  its  opposite. 

Though  a  few  cynics  say  that  seeing  is  believing, 
and  all  men  are  liars  and  would  all  be  thieves  if  they 
dared,  we  all  every  day  trust  each  other  beyond 
limits  of  recovery  at  law.  A  neighbour  who  pushes 
his  abstract  rights  to  the  full  is  a  bad  neighbour, 
and  is  happily  always  in  a  minority.  Credit  in  the 
wide  sense  of  the  trust  of  one  trader  in  another  ex- 
tends far  beyond  the  lending  of  money  under  secur- 


GOVERNMENT   IS   FOUNDED   ON   OPINION         33 

ity.  There  is  a  simple  trust  of  native  primitive  men 
(like  those  Indians)  which  disappears  with  civi- 
lization, but  there  is  also  a  trust  first  created  and 
upheld  by  civilization.  Civilization  among  other 
things  means  this  very  discipline.  ''Do  to  others 
as  you  would  that  they  should  do  unto  you"  is 
a  working  maxim  even  in  the  economic  region. 
''Honesty  is  the  best  policy"  stands  in  close  rela- 
tion to  it.  In  this  sense,  as  has  been  already  hinted, 
it  may  be  true  that  "  whate'er  is  best  administered 
is  best;"  a  nation  of  honest  men  might  succeed, 
might  prosper  industrially,  under  a  relatively 
inferior  economic  system. 

The  "opinion"  on  which  Hume  said  government 
was  founded  has  been  already  spoken  of  as  the 
assent  or  consent  of  the  governed.  Like  other 
synonyms  these  two  words  are  sometimes  used 
indifferently;  but  taken  strictly  assent  is  a  passive 
adhesion,  consent  an  active,  involving  conscious 
will.  Now  in  the  economic  system,  in  analogy  with 
the  body  politic,  there  is  a  body  of  customs  un- 
written and  yet  generally  obeyed;  and  there  is  a 
body  of  customs  to  which  the  nation  has  given 
its  consent  deliberately  by  turning  them  into  laws 
backed  expressly  by  public  force.  Both  are  forms 
of  the  opinion  on  which  government  is  founded. 
We  may  look  at  both  separately  and  then  con- 
sider whether  there  is  anything  beyond  both,  and 
whether  this  thing  beyond  is  opinion  or  not  opinion. 

There  is  a  passage  in  Adam  Smith's  Lectures 
that  may  ^erve  as  a  starting  point  for  this  part 


34  DISTURBING   ELEMENTS 

of  the  discussion.  He  says  (somewhat  too  broadly) 
"Whenever  commerce  is  introduced  into  a 
country  probity  and  punctuaUty  always  accom- 
pany it.  These  virtues  in  a  rude  and  barbarous 
country  are  almost  unknown.  Of  all  the  nations 
in  Europe  the  Dutch,  the  most  commercial,  are 
the  most  faithful  to  their  word.  The  English  are 
more  so  than  the  Scotch  but  much  inferior  to  the 
Dutch  and  in  remote  parts  of  this  country  they  are 
far  less  so  than  in  the  commercial  parts  of  it. 
This  is  not  at  all  to  be  imputed  to  national  char- 
acter, as  some  pretend.  There  is  no  natural 
reason  why  an  Englishman  or  a  Scotchman  should 
not  be  as  punctual  in  performing  agreements  as 
a  Dutchman."  He  explains  it  by  "self  interest," 
which  is  common  to  all  men.  "A  dealer  is  afraid 
of  losing  his  character  and  is  scrupulous  in  observ- 
ing every  engagement.  When  a  person  makes 
perhaps  twenty  contracts  in  a  day  he  cannot  gain 
so  much  by  endeavouring  to  impose  on  his  neigh- 
bours as  the  very  appearance  of  a  cheat  would  make 
him  lose.  When  people  seldom  deal  with  one 
another,  we  find  that  they  are  somewhat  disposed 
to  cheat  because  they  can  gain  more  by  a  smart 
trick  than  they  can  lose  by  the  injury  which  it 
does  their  character."  As  Prof.  Cannan  points  out. 
Sir  William  Temple's  Observations  upon  the  United 
Provinces  had  described  the  Dutch  in  the  same 
terms  and  had  drawn  the  same  conclusion. 

This  is  Temple's  conclusion:  "Trade  depends  as 
much  upon  common  honesty  as  war  does  upon 


GOVERNMENT   IS   FOUNDED    ON   OPINION        35 

discipline."  Temple  adds  ''As  trade  cannot  live 
without  mutual  trust  among  private  men  so  it 
cannot  grow  or  thrive  to  any  great  degree  with- 
out a  confidence  both  of  public  and  private  safety 
and  consequently  a  trust  in  the  Government  from 
an  opinion  of  its  strength,  wisdom,  and  justice." 
It  might  be  thought  that  the  sentence  which  I 
quoted  from  Hume  was  really  borrowed  from 
Temple;  but  the  difference  appears  in  Temple's 
essay  On  the  Origin  and  Nature  of  Governmeyit: 
"Power  arising  from  strength  is  alwaj^s  in  those 
that  are  governed  who  are  many,  but  authority 
arising  from  opinion  is  in  those  that  govern  who 
are  few."  This  is  just  the  distinction  which  Hume 
went  beyond  or  explained  away.  Government  may 
be  founded  on  the  opinion  of  those  who  singly  are 
weak  but  collectively  are  strong,  tho'  they  do  not 
know  it. 

We  may  paraphrase  Temple's  saying  and  pro- 
nounce that,  as  an  army  depends  upon  habits  of 
discipline,  a  commercial  society  depends  upon 
habits  of  trust.  To  us  in  a  fully  developed  com- 
mercial society  this  means  habits  of  credit.  Either 
word,  trust  or  credit  brings  us  into  the  region  of 
probabilities  as  distinguished  from  demonstration. 
It  involves  that  something  is  coming  which  has 
not  yet  come  and  which  has  the  usual  chapter  of 
accidents  against  it  but  no  more  than  the  usual. 
It  is  faith  as  opposed  to  sight. 

Now  in  the  world  we  are  surrounded  with  prob- 
abilities  and  "probability  is  the  guide  of  life." 


36  DISTURBING   ELEMENTS 

Probability  in  the  life  of  the  man  of  business 
has  credit  as  one  of  its  chief  forms.  His  own  credit 
is  the  probability  that  he  will  be  able  to  meet  his 
obligations;  his  neighbour's  that  his  neighbour  will 
meet  his.  The  art  of  life  has  made  progress;  and 
one  sign  of  it  is  that  the  array  of  probabilities  have 
become  known  in  all  their  degrees  of  nearness  and 
farness,  human  enterprise  and  human  honesty  being 
as  much  reckoned  among  them  as  natural  resources 
and  the  likelihood  of  overcoming  material  diffi- 
culties. It  is  one  possible  description  of  the 
'speculator'  that  he  is  willing  to  run  unusual 
risks  of  both  kinds,  human  and  physical,  for  the 
chance  of  unusual  gain.  His  is  a  form  of  trust 
that  is  barely  if  at  all  warranted  by  probabilities. 
The  ordinary  man  is  one  who  trusts  to  probabili- 
ties no  more  or  less  than  his  fellows. 

Confining  ourselves  to  the  human  element,  we 
may  consider  what  the  extent  of  trust  usually  is 
in  a  commercial  society.  Adam  Smith  speaks  as  if 
it  were  only  considerable  among  those  who  had  fre- 
quent dealings  with  each  other.  Merchants,  we 
are  told,  are  more  honest  to  merchants  than  to  the 
public.  The  principle  is  a  wider  one.  It  would 
seem  that  all  society  is  divided  into  groups,  and 
within  the  groups,  between  members  of  the  groups, 
the  trust  is  greater  than  between  those  not  so 
banded  together. 

As  a  general  rule,  men  trust  their  own  families 
or  relatives,  or  members  of  the  same  club,  more 
than  those  that  are  without ;  they  may  in  certain 


GOVERNMENT   IS   FOUNDED    ON   OPINION         37 

cases  trust  those  that  are  of  the  same  town  or  of 
the  same  country  or  even  of  the  same  race.  This 
seems  due  not  to  frequency  of  deahngs  but  to  real 
or  supposed  knowledge  of  character;  we  form  a 
presumption  of  trustworthiness  in  regard  to  those 
whom  we  know,  and  the  presumption  is  less 
(or  vanishes)  in  regard  to  strangers  and  foreigners. 
Adam  Smith's  idea  is  of  course  perfectly  correct  for 
small  commercial  groups;  members  of  the  Stock 
Exchange  trust  to  pieces  of  pa-per,  sometimes 
thrown  from  the  windows  down  into  the  street,  of 
the  most  informal  character,  in  transactions  in- 
volving large  sums  of  money.  But  the  principle  is 
the  same  as  for  the  Hudson's  Bay  Indians,  and 
the  feeling  is  the  same:  that  any  one  on  either 
side  who  is  false  to  his  bargain  is  a  public  enemy. 
Besides  a  presumption  of  common  honesty,  com- 
mercial credit  involves  a  presumption  of  success  or 
failure  in  regard  to  those  trusted;  and  this  depends 
on  knowledge  of  capacity  and  of  circumstances 
as  well  as  character.  The  probability  that  a  man 
will  meet  his  obligations  is  not  an  affair  of  his 
integrity  alone.  We  must  have  local  knowledge  to 
judge  how  far  he  is  likely  to  succeed.  Yet,  if 
transactions  are  widespread,  we  need  to  depend 
on  the  integrity  of  those  w^ho  have  the  local  know- 
ledge to  give  us  a  faithful  account  of  the  matter. 
The  farther  away  we  go  from  the  simple  exchange 
between  man  and  man,  the  harder  it  becomes  to 
proceed  by  'common  honesty'  alone.  Human 
frailties  that  are  negligible  in  small  quantities  at 


38  DISTURBING   ELEMENTS 

close  distance  become  appreciable  when  transac- 
tions are  indirect  and  the  two  ends  of  the  chain 
become  farther  and  farther  removed.  The  need 
for  something  more  definite  and  tangible  than 
customs  of  trade  becomes  felt,  and  customs  be- 
come laws,  for  the  protection  of  the  distant  ex- 
tremities. 

There  are  no  doubt  some  economic  principles 
that  do  not  need  assent  or  consent  still  less  the 
statute  book  to  enforce  them.  There  is  the  prin- 
ciple that  the  cheaper  article  will  drive  out  the 
dearer.  There  is  Gresham's  law  of  the  coinage; 
the  bad  pieces,  if  put  on  the  same  footing  as  the 
good,  will  drive  the  good  out  of  circulation,  the 
bad  being  the  cheaper  tool  of  trade.  This  is  a 
consequence  of  the  very  idea  of  economy,  and 
that  idea  is  no  creation  of  law.  Then  there  is 
the  so-called  Malthusian  principle  that  population 
tends  to  increase  pari  passu  with  the  means  of 
living.  This  is  no  creation  of  law,  but  is  most 
evident  in  the  most  lawless  and  barbarous  nations. 
Such  principles  are,  as  it  were,  prior  to  customs, 
and  do  not  become  4aws'.  They  are  really  limits 
of  legislation.  If  legislation  does  not  keep  them  in 
mind,  laws  will  be  passed  that  a*re  inoperative,  to 
the  confusion  of  the  legislators.  Laws  may  be 
inoperative  also  when  they  do  not  regard  suffi- 
ciently the  limitations  of  the  average  man  due  to 
his  imperfect  civilization.  We  say  in  such  cases 
that  the  people  were  not  ripe  for  such  a  law.  We 
do  not  simply  say  that  the  law  went  beyond  pub- 


GOVERNMENT   IS   FOUNDED    ON   OPINION        39 

lie  opinion,  for  it  may  concern  a  matter  about 
which  there  is  no  public  opinion  possible,  say  a 
public  library  or  post-office  among  savages  or 
municipal  government  among  those  that  have 
never  known  any  representative  government  at  all. 
They  are  not  hostile  to  it ;  they  do  not  take  sides 
about  it;  they  simply  do  not  understand  what  it 
is.  To  take  a  less  extreme  case,  many  of  us 
believe  the  ideal  industrial  system  both  for  manu- 
facture and  agriculture  to  be  a  form  of  coopera- 
tion and  co-partnership.  But  there  is  probably 
no  nation  however  small  where  cooperation  could 
be  established  by  law  without  the  discovery  that 
the  sentiments,  theory,  and  practice  of  the  aver- 
age man  made  him  unfit  to  understand  such  a 
system,  still  less  to  work  under  it  with  as  compar- 
atively little  friction  as  under  the  competitive  re- 
gime of  the  present  day.  Our  friends  who  would 
establish  a  cooperative  commonwealth  by  a  politi- 
cal revolution  need  to  remember  that  govern- 
ment is  founded  on  opinion  in  this  sense  also. 

Laws  growing  out  of  customs  are  of  course  most 
likely  to  hold  their  ground.  The  dollar  was  made 
by  law  the  currency  when  custom  had  made  it  so 
de  facto,  on  the  American  Continent.  The  Irish 
Land  Laws  grew  out  of  Ulster  Tenant  Right 
which  was  custom  first  and  law  afterwards;  no 
doubt  the  land  laws  have  since  then  developed 
into  a  system  of  full  ownership  of  the  occupier 
to  which  there  was  no  antecedent  custom.  The 
long  leases  of  the  Scotch  farmer  which  (according 


40  DISTURBING   ELEMENTS 

to  Adam  Smith)  so  benefited  Scotch  agriculture 
seem  to  have  grown  out  of  a  custom.  The  French 
peasant  properties  existed  before  the  Revolution 
and  before  the  Code  which  encouraged  subdi- 
vision. 

From  some  of  those  instances  it  appears  that,  be- 
sides growing  out  of  custom,  law  grows  beyond 
custom.  This  happens;  but  modern  legislation, 
especially  of  an  economical  character,  is  passed 
largely  to  prevent  arbitrary  infraction  of  a  gen- 
eral custom  by  individual  'bad  neighbours.'  We 
need  besides,  to  distinguish  the  laws  of  free  self- 
governing  nations  and  the  laws  of  those  less  free. 
The  less  free,  under  mere  '  virtual'  representation, 
may  be  content  to  obey  the  laws  though  not  fully 
their  own.  Government,  where  the  governed  do 
not  consciously  share  in  it,  may  well  be  said  to  be 
founded  on  a  stupid  opinion,  and  it  may  be  pedan- 
tic to  call  it  democratic.  Such  modern  nations  as 
have  representative  government  are  impatient  of 
laws  that  are  not  their  own;  and,  if  their  existing 
laws  represent  customs  that  are  ceasing  to  pre- 
vail, it  is  a  matter  of  time  for  the  laws  to  be 
abrogated  in  order  that  modern  customs  may  be 
represented  by  modern  legislation. 

Except  in  the  lowest  stages  of  civilization,  it  would 
seem  that  more  initiative  is  left  to  the  people  and 
their  rulers  than  is  implied  in  a  well  known  theory, 
sometimes  called  the  ''Materiahstic  view  of  his- 
tory." According  to  Marx  and  Professor  Loria  the 
economic  system  is  the  maker  of  the  political, 


GOVERNMENT  IS  FOUNDED   ON   OPINION        41 

and  men  can  do  little  with  their  system  of  produc- 
tion and  distribution  except  live  under  it.  Tt  is 
hard  to  believe  this  true  even  of  early  times.  Con- 
quest depended  on  generalship  as  well  as  on  the 
sinews  of  war.  Economic  causes  count  for  more  now 
than  they  ever  did,  but  even  now  we  see  them 
thwarted,  controlled,  and  counteracted  by  the 
political  and  other  non-economic  forces  of  civili- 
zation. There  were  long  ago  more  customs  and 
laws  of  an  anti-economic  character  than  we  have 
now;  but  there  are  some  still.  And  the  deliberate 
will  of  the  people  counts  for  much  more.  How 
merely  economic  causes  and  motives  could  account 
for  Factory  Acts,  is  hard  to  see.  If  the  answer  is 
that  in  'the  long  run'  Factory  Acts  benefit  a  people 
even  economically,  this  may  be  granted;  but  the 
foresight  implied  here  is  very  much  beyond  the 
passive  receiving  of  the  influence  of  economic  causes. 
If  we  are  to  include  a  political  philosophy 
among  economic  causes,  the  materialistic  view  of 
history  implies  a  great  deal  of  human  will  and  judg- 
ment, and  would  hardly  be  materialistic  at  all. 
Such  a  will  and  judgment  have  been  exercised 
more  or  less  through  all  the  ages;  and  they  are 
not  likely  to  prevail  less  in  our  own  day.  The  eco- 
nomic system  may  be  modified  by  laws,  for  the 
better  by  good  laws,  for  the  worse  by  bad.  Brit- 
ain owed  a  great  deal  to  Acts  providing  for  Joint 
Stock  Companies  and  for  Industrial  and  Benefit 
Societies.  Canada  owes  a  great  deal  to  a  sound 
system  of  Banks  by  law  established,  in  keeping 


42  DISTURBING   ELEMENTS 

no  doubt  with  the  customs  of  the  Scotch  settlers 
but  going  beyond  them. 

There  is  no  need  to  multiply  examples.  The 
economic  system  is  doubtless  modified  chiefly 
from  within  itself,  but  it  can  be  modified  a  little 
from  without.  We  do  not  simply  stand  still  and 
see  it  go.  Herbert  Spencer,  with  all  his  philoso- 
phical anarchism,  desires  the  State  to  enforce 
contracts  and  keep  their  conditions  just.  If  vol- 
untary association  which  he  extols  can  do  so  much 
else,  it  might  have  been  expected  to  be  equal  to 
that  duty  also.  But  two  maxims  drawn  from 
Henry  Maine  become  an  answer  to  Spencer  as 
soon  as  they  are  comprehended:  ''Society  de- 
velopes  from  the  family  to  the  tribe  and  from  the 
tribe  to  the  State."  ''Society  developes  from  status 
to  contract."  The  functions  of  the  State  seem 
as  rational  and  as  necessary  to  civilization  as  the 
functions  of  tribe  and  family.  The  more  civi- 
lized a  people,  the  greater  is  their  tendency  to 
translate  indefinite  custom  into  definite  law.  The 
State  is  as  truly  founded  on  Opinion  as  is  Society, 
and  a  people  finds  in  its  State  what  it  can  find  no- 
where else.  In  a  modern  State  the  strong  majority 
protects  the  weak  individual  against  the  strong 
individuals.  In  this  sense  it  is  true  that  the  State 
so  far  from  making  laws  for  the  strongest  makes 
them  for  the  weakest.  Justice  is  or  ought  to  be 
rather  the  '  interest  of  the  weak '  than  of  the  strong. 

What  bearing  has  this  on  economics?    The  State 
is  certainly  not  a  mere  economic  body.     A  com- 


GOVERNMENT   IS   FOUNDED    ON   OPINION         43 

munity  of  bargain  drivers  would  not  vi  terminorum 
imply  sheltering  of  the  weak ;  yet  in  civilized  coun- 
tries we  are  all  agreed  about  this  duty,  differing 
only  in  our  views  of  the  best  way  of  doing  it. 
The  State  is  or  ought  to  be  something  higher  than 
the  economic  system  of  a  country.  The  opinion 
on  which  the  economic  system  depends  is  not 
identical  with  the  opinion  on  which  the  State  is 
founded.  It  is  a  system  within  a  system.  We  may 
agree  with  the  historical  theorists  that  the  body 
economic  is  in  a  sense  part  and  parcel  of  a  nation's 
whole  life;  but  it  is  within  everyone's  experience 
that  such  spheres  of  human  activity  are  also  in  a 
real  sense  a  world  by  themselves.  A  man  is  said 
to  ''do  things  in  business  which  he  would  never 
do  in  private  life."  In  politics  the  disregard  of  re- 
straints is  still  more  evident  and  our  admiration  of 
the  great  machine,  the  State,  is  often  equalled  by 
our  surprise  at  the  littleness  of  the  men  who  con- 
trol it.  The  same  may  sometimes  be  said  of  the 
economic  world ;  a  man  may  be  honest  in  business 
who  is  not  a  model  of  truthfulness  in  private  life. 
Men,  also,  are  accused  (as  if  it  were  a  fault)  of 
introducing  the  methods  of  business  into  litera- 
ture, politics,  or  rehgion.  It  is  true  that  no  one  of 
these  spheres  of  human  activity  really  make  our 
whole  world;  we  need  the  union  of  them.  But  there 
has  been  an  exaggeration  of  their  solidarity,  as 
conceived  to  exist  in  the  national  life  of  our  own 
time.  Precisely  in  our  own  times  the  theory  of  soli- 
darity has  been  started  and  precisely  in  our  own 


44  DISTURBING   ELEMENTS 

times  has  the  solidarity  been  less  marked.  Most 
of  the  spheres  of  human  activity  have  international 
as  well  as  national  attachments,  and  the  opinion 
on  which  they  rest  is  that  of  a  wider  circle  than 
a  nation. 

The  foundation  still  remains  opinion,  but  it  is 
of  men  in  general  or  at  least  of  civilized  men.  True, 
the  economic  system  implies  in  any  case  more  than 
'opinion'  or  any  assent  or  consent  to  certain 
rules  whether  customs  or  laws;  it  implies  also  an 
agreement  in  action  of  men,  founded  on  their 
common  human  nature  or  reason.  The  idea  of 
Economy  itself  implies  a  rational  creature,  pre- 
ferring, say,  a  less  cost  to  a  greater,  or  division  of 
labour  to  individual  self  sufficiency,  or  money  to 
barter,  etc., — to  whatever  nation  he  belongs. 
Men  have  been  controlled  by  a  reason  of  which 
they  have  only  in  these  latter  days  tried  to  give 
a  full  account.  All  nations  have  more  or  less 
practised  economy;  but  Political  Economy  is 
a  late  study. 

We  can  say  that  comparing  the  economic  sys- 
tem with  the  political  we  find  a  certain  analogy, 
something  in  the  economic  body  corresponding 
to  the  'opinion'  on  which  the  political  body  de- 
pends; we  can  say  that  the  analogous  element 
is  the  honesty  and  trust  that  make  so  many  more 
economies  possible  than  would  be  possible  with- 
out them; — also  that,  as  other  customs  become  laws 
of  the  State,  economic  customs  may  do  so,  with 
advantage,  or  sometimes  (owing  to  human  falii- 


GOVERNMENT   IS   FOUNDED    ON   OPINION        45 

bility)  with  disadvantage.  There  is  a  residual 
element  which  is  not  quite  analogous. 

We  may  now  go  on  to  ask  whether  the  more 
familiar  "public  opinion"  that  does  so  much  good, 
or  according  to  the  Essay  on  Liberty  so  much 
harm,  has  any  such  weight  in  the  economic  system. 
Does  it  contain  the  promise  or  potency  of  all  pro- 
gress, or  is  it  an  opposing  force,  hindering  the 
progress  which  might  come  from  the  originality 
of  individuals? 

The  question  may  be  also  put  positively:  If 
honesty  or  faith  in  one  another  secures  order  in 
the  industrial  world,  what  secures  progress  there? 

If  the  progress  is  to  be  in  material  wealth,  the 
answer  is  commercial  enterprise,  with  originality 
and  invention.  We  might  have  a  well-ordered 
community  with  every  quiet  virtue,  and  with 
liberty,  equality,  and  fraternity,  but  with  no  move- 
ment forward,  for  better  production  and  distribu- 
tion. What  then  produces  the  forward  move- 
ments? What  makes  a  "dynamic"  state  of  society, 
to  use  Professor  Patten's  language? 

Adam  Smith  was  content  to  assume  as  an  ac- 
knowledged fact  the  ''constant  desire  of  every  man 
to  better  his  own  condition."  The  desire  does 
not  exist  in  uncivilized  man  or  even  always  in  the 
civilized.  The  native  of  Bengal  who  represents 
a  very  old  civilization  does  not  have  this  desire. 
The  root  of  ''statics"  and  the  root  of  "dynamics" 
do  not  lie  so  near  each  other.  Men  might  live  as 
industriously  and  parsimoniously  as  ants,  and,  like 


46  DISTURBING   ELEMENTS 

them,  be  no  better  equipped  in  the  later  generations 
than  in  the  earUer.  The  mere  fact  that  with  mod- 
ern science  men  have  more  certainties  and  more 
or  at  least  more  rational  probabilities  would  not 
neccessarily  convert  a  stationary  State  into  a  pro- 
gressive one.  We  may  stand  and  consider  the 
old  paths,  "vias  antiquas/'  without  doing  what 
Bacon  told  us  and  making  them  a  fresh  starting 
point.    The  Chinese  long  stood  still  in  this  manner. 

We  need  not  attempt  to  follow  the  course  of  a 
progress  resulting  from  what  people  call  purely 
economic  motives,  for  (the  miser's  case  excepted) 
it  may  be  doubted  if  there  is  such  a  thing.  It 
may  be  doubted  if  there  is  enterprise  or  invention 
aimed  at  wealth  for  wealth's  sake  apart  from  the 
glory  and  especially  the  power  that  wealth  gives, 
whether  it  be  the  power  over  others  generally  or 
the  power  to  serve  children  and  friends  or  favourite 
''causes,"  all  in  fact  that  is  our  larger  self.  In  this 
respect  the  economic  body  is  bound  up  with  the 
extra-economic.  Our  whole  economic  system  is 
a  means,  not  an  end  in  itself.  But,  for  all  that, 
given  that  wealth  is  not  (rationally)  desired  for  its 
own  sake,  the  machinery  of  its  getting  may  still 
be  studied  by  itself;  and  we  are  not  freed  from  the 
question — whence  comes  enterprise. 

Enterprise  may  be  distinguished  from  invention. 
Invention  is  a  form  of  enterprise,  but  the  latter 
suggests  something  more.  Invention  might  be 
used  to  keep  up  the  comforts  of  a  State  that  was 
little  more  than  stationary.    They  are  however 


GOVERNMENT   IS   FOUNDED    ON   OPINION         47 

very  near.  On  the  whole  it  is  true  now  at  least 
that  invention  prompts  enterprise,  and  of  course 
may  be  itself  a  form  of  it. 

The  competition  which  is  the  feature  of  modern 
business  prompts  both.  Profit,  as  distinguished 
from  interest,  is  not  now  secured  so  much  by 
'exploitation'  of  the  workers  as  by  real  economy 
or  real  economies,  in  all  but  the  marginal  case. 
Competition  by  prompting  enterprise  increases 
economy.  No  doubt  there  is  still  some  ''exploita- 
tion;" and  there  are  profits  due  to  the  unearned 
possession  of  natural  advantages,  of  the  nature  of 
rent.  But  there  is,  above  all,  the  "rent  of  ability," 
tho'  ability  is  often  without  its  rent  because  mis- 
placed. Part  of  the  economy  truly  described  as 
political  would  consist  in  putting  men  of  ability  in 
their  right  place.  They  very  often  go  there  as  it  is ; 
but  it  often  happens  otherwise;  and,  wherever 
otherwise,  there  is  waste  or  defective  economy. 
Progress  pro  ^an^o  is  slackened.  Perhaps  'a  supe- 
rior genius,^  as  Ricardo  said,  or  (as  others  might 
say)  an  Economist  King  would  so  arrange  the  eco- 
nomic functions  of  men  that  every  one  had  his 
best  place.  But  it  would  need  a  divine  wisdom  in 
our  rulers  such  as  we  have  not  yet  seen. 

It  would  not  perhaps  be  so  hard  to  hire  the 
ability  and  tax  the  unearned  increment  of  it,  the 
unearned  difference  between  a  clever  man  and  a 
fool,  the  cleverness  being  the  gift  of  nature  like  the 
fertility  of  a  soil.  But,  so  far  from  taxing  clever- 
ness, as  was  proposed  by  the  wiseacre  to  the  finance 


48  DISTURBING   ELEMENTS 

minister  in  Voltaire's  Homme  aux  quarante  ecus, 
we  should  rather  give  it  a  bounty.  How  then 
can  we  so  reward  the  clever  men  as  to  ensure 
their  services?  Earth  cannot  refuse  its  services 
to  us;  but  men  are  less  tractable,  and  they  need 
to  be  coaxed  in  a  very  different  way.  The  best 
way,  in  view  of  the  whole  facts,  seems  to  be  the 
old  way  of  education;  educate  the  clever  men 
and  let  them  reward  themselves  by  worMly  gains. 
But  let  us  not  give  them  a  double  advantage,  that 
of  nature  and  that  of  legal  privileges;  nature  has 
made  it  only  too  true  that  to  him  that  hath  shall 
be  given.  We  need  not  magnify  the  influence  of 
this  ordinance  of  nature. 

Educate  public  opinion,  some  will  say,  and  then 
the  deterrent  effects  of  it  on  originality,  the  effects 
described  by  the  Essay  on  Liberty,  will  be  less. 

It  is  improbable  that  any  education  will  do  this; 
the  really  original  man  will  always  have  to  struggle 
against  the  crowd.  It  is  the  penalty  he  pays  for 
his  superiority,  in  industry  as  elsewhere.  The 
present  world  indeed  is  so  imperfect  that  in  order 
to  succeed  in  it  at  all  the  original  man  is  often 
forced  to  depend  on  his  second  best  faculty  rather 
than  his  best.  It  is  a  good  saying  of  Mill's  that 
every  society  can  train  up  the  next  generation  to 
be  at  least  as  good  as  itself  or  a  little  better. 
The  phrase  "a,  little  better"  may  point  us  to  a 
phenomenon  on  which  Mill  himself  laid  too  little 
stress,  the  tendency  of  ordinary  folk  to  be  influ- 
enced by  strong  personalities,  the  tendency  to  hero 


GOVEKNMENT  IS   FOUNDED    ON    OPINION        49 

worship.  The  day  of  masters  is  over,  but  there 
will  always  be  leaders.  One  feature  of  a  modern 
democratic  society  is  its  extreme  respect  for  any 
one  only  a  little  taller  intellectually  than  his  fellows. 
In  matters  economical,  the  leaders  are  the  men  of 
enterprise  and  invention.  It  is  hardly  true  now 
that  inventions  spread  slowly.  Invention  is  not 
economically  very  valuable  till  enterprise  makes  it 
so.  The  mere  embodiment  of  inventions  in  a  sale- 
able object  does  not  bring  them  into  economic  dy- 
namics. A  microscope  or  spectroscope  is  not  an 
economic  power  because  expensive.  Inventions 
must  be  or  become  of  direct  influence  on  production 
or  distribution,  and  the  economist  can  take  no 
account  of  them  till  they  are  so.  But  it  is  a  feature 
of  our  own  age  that  the  applications  of  invention 
are  quickly  seen  and  hard  to  hide.  The  keenness  of 
competition  leads  the  enterprising  men  of  business 
to  look  on  all  sides  for  aids  from  invention.  The 
applications  of  electricity  for  example  have  been 
very  rapid  in  the  countries  where  competition  is 
keenest.  As  long  as  men  remain  capable  of  inven- 
tions, the  rate  of  profits  will  not  go  down  to  zero. 
There  is  no  sign  of  flagging  at  present.  There  are 
few  businesses  where  the  old  conservative  methods 
are  still  enough  to  maintain  profit.  Efficiency  has 
been  increased  even  where  the  profitableness  is  a 
subordinate  consideration,  in  public  works.  Coin- 
ing of  money,  which  might  have  remained  station- 
ary in  its  methods  as  being  sheltered  from  competi- 
tion, has  shared  in  the  progress  round  it;  and  our 


50  DISTURBING   ELEMENTS 

Mints  have  been  introducing  oil  furnaces,  electric 
motors,  automatic  weighing  machines,  electrolytic 
refining,  each  and  all  of  which  improvements  would 
have  seemed  a  wonder  to  our  forefathers.  The  pro- 
ducers sheltered  from  competition  have  learned 
lessons  from  producers  not  so  sheltered.  If  all 
were  sheltered,  there  would  be  none  from  whom 
to  learn.  There  would  certainly  be  fewer  inven- 
tions, or  applications  of  invention  to  the  arts. 

Besides  inventions  that  may,  if  applied,  facilitate 
production,  or  are  even  directly  made  (like  the 
power  loom  or  cotton-gin  or  sewing  machine)  to 
that  very  end,  there  are  inventions  that  play  an 
even  more  obvious  part  in  modifying  the  economic 
system — the  inventions  that  facilitate  exchanges. 
Such  are  the  Exchequer  bills  (of  Montague), 
Treasury  bills  (of  Bagehot),  money  itself,  banks 
and  clearing  houses.  Finally  there  are  inventions 
in  distribution,  companies  and  cooperative  societies 
being  examples. 

We  feel  the  distinction  between  the  possibly 
economical  and  the  necessarily  economical  in 
comparing  inventions  of  production  withinventions 
of  exchange,  more  particularly.  Money  as  the 
general  tool  of  trade  has  more  close  connection  with 
the  economical  system  than  a  steam  engine. 
The  waggon  way  on  the  earth  is  more  of  a  mechan- 
ical invention  and  less  necessarily  an  economical 
one  than  the  waggon  way  through  the  air  of  which 
Adam  Smith  speaks.  All  the  modern  forms  of 
credit  described  in  such  a  book  as  Hartley  Withers' 


GOVERNMENT   IS   FOUNDED    ON   OPINION        51 

Meaning  of  Money  are  almost  directly  economical. 
They  are  also  (be  it  observed)  almost  directly  in- 
ternational .  They  depend  for  their  chief  and  most 
living  applications  on  the  Great  Intercourse  of 
nations.  Of  course  the  others  (inventions  of  pro- 
duction and  inventions  of  distribution)  are  possibly 
so  too,  and  those  of  production  at  least  easily 
become  so.  It  is  not  the'  opinion'  of  a  nation  or 
even  of  many  nations  that  puts  them  in  force  but 
their  economy,  as  discerned  by  those  actually  en- 
gaged in  business,  discerned  far  more  easily  than 
the  wisdom  of  a  political  expedient  is  discerned 
by  the  people  or  the  statesmen. 

What  part  is  played  by  'public  opinion,'  in 
distinction  from  the  'opinion'  of  Hume's  dictum? 

As  the  form  of  government  is  based  on  opinion 
in  the  sense  of  the  general  will,  the  governing  from 
day  to  day  depends  on  public  opinion,  a  sum 
of  particular  wills,  and  not  the  whole  but  a  majority 
of  them. 

'Public  opinion'  is  a  familiar  idea,  as  ill  defined 
as  most  of  our  familiar  ideas  like  'matters  of  com- 
mon knowledge,'  'what  every  schoolboy  knows.' 
It  is  not  latent;  yet  it  is  not  embodied  in  cus- 
toms and  laws.  It  is  supposed  to  utter  itself 
and  it  has  many  voices,  of  which  the  newspaper 
is  the  loudest.  It  is  not  always  the  loudest  voice 
that  speaks  for  the  largest  number.  Where  else 
is  it  expressed?  Sometimes  at  the  polls,  in  the 
churches,  at  public  meetings,  in  subscription 
lists,  in  the  sale  of  books.    It  is  mainly  national 


52  DISTURBING   ELEMENTS 

and  chauvinistic  rather  than  patriotic,  and  it  is 
very  hard  for  a  foreigner  to  understand.  It  is 
sometimes  voluble  in  private  conversation,  say 
against  Trusts,  but  timid  in  'public'  action.  A 
plebiscite  is  often  urged  as  the  best  way  of  ascer- 
taining it  when  legislation  fears  to  depend  on  ordi- 
nary representative  methods.  We  are  told  to  as- 
certain it  in  this  way  before  adopting  Prohibition 
of  the  sale  of  strong  drinks.  Politically  it  is  the 
strong  feeling  of  the  great  mass  of  the  people,  no  t 
necessarily  arrived  at  articulate  expression  but 
rather  failing  in  clearness  than  in  energy. 

Now  even  the  joint /eeZmgr  of  the  great  body  of  the 
the  people  may  be  higher  than  the  feehng  of  the 
separate  members;  there  is  a  truth  in  the  idea  of  a 
collective  wisdom;  the  view  of  Aristotle  may  be 
well  set  against  Carlyle's.  It  is  a  force  to  be 
recognized,  even  if  we  cannot  see  in  it  the  promise 
and  potency  of  all  national  development.  Even 
the  heroes  can  only  have  their  way  if  they  get 
'public  opinion'  on  their  side.  But  it  is  hardly 
a  vox  Dei  any  more  than  it  is  the  animal  cry 
of  a  many  headed  monster  or  the  artful  voice  of 
a  ''great  sophist."  It  is  the  voice  of  one  who  has 
as  much  to  learn  as  to  teach,  whether  in  morality 
or  in  enlightenment.  The  statesman  who  uses 
it,  if  he  is  of  the  highest  rank,  always  goes  a 
little  beyond  it ;  and  if  he  and  his  like  are  followed 
we  have  a  progress  that  has  some  guidance  in  it. 
It  is  not  Anarchism.  Mill  saw  little  but  evil  in  it 
because  he  was  impatient  at  the  slowness  of  the 


GOVERNMENT   IS   FOUNDED    ON   OPINION        53 

guidance.  But  a  nation  composed  of  such  origi- 
nal persons  as  he  describes  for  us  in  the  Essay- 
on  Liberty  would  not  have  been  guided  at  all;  and 
it  is  doubtful  if  we  can  dispense  with  leaders  in 
any  period  within  the  range  of  practical  politics. 
The  negative  or  repressive  or  even  oppressive 
action  of  public  opinion  is  certainly  one  salient 
feature;  but  the  other  is  there,  and  in  civilized 
countries  it  is  a  tolerably  sure  ground  for  hope  in 
the  future. 

How  apply  all  this  to  the  economic  system? 

The  answer  may  be  as  follows:  There  are 
parts  of  the  economic  system  hardly  now  to  be 
influenced  by  public  opinion  because  not  absent 
without  disorder  and  disappointment  and  a  nega- 
tion of  all  economy  as  we  in  civilized  times  con- 
ceive it.  They  might  be  rudely  disturbed  by 
superstition  and  savagery.  Such  are  the  princi- 
ples of  exchange  and  division  of  labour,  value 
currency,  and  credit.  To  that  extent  economic 
theory  is  also  superior,  or  if  you  like  anterior, 
to  public  opinion.  But  economic  policy  depends 
as  we  all  know  very  largely  on  public  opinion; 
and,  as  theorists  are  human,  and  even  man  is 
influenced  by  his  atmosphere,  economic  theory 
is  influenced  by  it  too,  as  soon  as  the  first  ele- 
mentary principles  are  passed  and  the  question 
is  of  their  further  applications.  Thus,  no  econo- 
mist would  repudiate  the  principle  of  division 
of  labor,  and  economists  would  hardly  be  biassed 
in  their  generalHheory  of  value,  at  least  in  its 


54  DISTURBING   ELEMENTS 

simplest  form.  But  when  free  trade  is  alleged  to 
be  a  development  of  division  of  labor  there  may 
be  a  bias  in  our  attitude,  hostile  or  favourable, 
towards  the  allegation;  and,  when  profits  are 
described  as  simply  the  robbery  of  the  workman, 
as  unpaid  labor,  or  confiscated  product  of  labor, 
the  analysis  (it  may  be  suspected)  has  been  tinged 
with  the  passion  of  the  social  reformer.  The 
pages  of  an  economic  writing  may  have  some- 
times too  close  a  likeness  to  a  speech  at  a  public 
meeting.  We  have  this  advantage  that  our 
first  principles  are  far  more  a  subject  of  gen- 
eral agreement  and  popular  acceptance  than  say 
the  first  principles  of  any  general  Social  Philoso- 
phy or  even  of  Education.  So  much  is  this  so 
that  people  complain  of  the  ''truisms"  and  "com- 
monplaces" filling  economic  text  books.  \They 
are  there  as  the  necessary  foundations ;  all  the  rest 
is  built  on  them;  but  people  do  not  accept  the 
building  with  the  same  readiness,  and  our  task  is 
largely  to  show  how  such  first  principles  lead  to  our 
further  conclusions.  In  politics  there  is  less  of 
such  deduction  possible.  The  general  basis  of  a 
system  of  representative  government  is  doubtless 
the  same  for  all  nations  capable  of  it ;  but  a  deduc- 
tive politics  is  of  far  narrower  scope  than  a  deduc- 
tive economics.  This  is  an  advantage  of  which 
public  opinion  cannot  entirely  deprive  us. 

We  need  ^H  the  advantages  we  can  get,  because, 
even  where  our  theory  springs  from  a  strict  an- 
alysis of  practice,  we  may  find  apparently  the 


GOVEKNMENT  IS  FOUNDED   ON   OPINION        55 

whole  nation  incredulous  of  it  as  contradicting 
practice.  People  still  insist  in  believing  the  weather 
influenced  by  the  phases  of  the  moon,  though 
scientific  men  are  agreed  on  the  contrary.  Where 
economic  theory  seems  to  point  one  way  and 
'public  opinion'  decides  for  an  economic  policy 
pointing  the  contrary  way,  are  we  to  say  with 
Edmund  Burke  that  we  'do  not  know  the  method 
of  drawing  up  an  indictment  against  a  whole 
people?'  If  we  obeyed  the  splendid  appeal,  we 
should  be  giving  up  our  effort  to  make  economics 
scientific.  The  dictum  is,  in  this  region  if  not 
elsewhere,  of  very  doubtful  value.  Collective 
wisdom  is  a  reality,  but  it  does  not  mean  infalli- 
bility. If  a  country  parish  may  err,  so  may  a 
county,  and  if  a  county  so  may  a  country.  The 
larger  the  numbers  believing  in  any  view  the  more 
probability  there  may  be  that  there  is  a  good 
reason  to  account  for  the  holding  of  the  view. 
But  the  popular  statement  of  a  widely  popular 
view  is  as  likely  to  be  inexact  as  the  view  itself 
is  likely  to  contain  some  truth.  It  will  be  right 
in  substance  and  almost  certainly  wrong  in  form. 
The  formulas  in  which  it  is  stated  are  almost  cer- 
tainly such  as  are  adapted  to  the  easy  comprehen- 
sion of  the  less  intelligent  citizens;  the  statement 
is  in  terms  of  the  ''marginal  intellect."  The  econ- 
omist is  bound  to  state  the  whole  truth  so  far  as 
he  can ;  and  that  can  seldom  be  done  in  one  proposi- 
tion or  two  but  only  in  at  least  three,  the  two  prem- 
ises and  the  conclusion  of  a  syllogism,  or  the  same 


56 


DISTURBING   ELEMENTS 


multiplied  many  times.  It  is  not  our  ambition 
to  end  our  economic  inquiries  soon  and  with  an 
epigram,  but  to  end  them  with  the  discovery  of 
the  object  of  our  search,  whether  that  be  soon  or 
late.  It  is  to  be  feared  that  public  opinion  puts 
a  premium  on  premature  discoveries  by  its  want 
of  sympathy  with  long  investigations,  and  its 
fondness  for  watchwords  and  short  formulas. 
But  all  economists  should  work  for  more  than  the 
remuneration  of  the  marginal  intellect.  Political 
Economy  is  indeed,  like  Politics,  founded  on  opin- 
ion ;  but  it  is  not  founded  or  dependent  on  '  public 
opinion. ' 

The  "materialistic"  view  of  history,  turning 
economics  into  a  whole  Political  Philosophy,  might 
be  expected  to  find  the  vox  Dei  in  every  public 
opinion,  or  else  it  too  must  recognize  that  an  eda- 
cation  of  it  is  possible,  i.e.,  that  it  is  in  some  de- 
gree modifiable  by  the  will  of  man.  The  holders 
of  this  view  seem  to  differ  little  from  others  in  their 
attitude  to  public  opinion.  They  are  content  to 
go  one  step  farther  than  Adam  Smith.  As  dis- 
tinguished from  Quesnay  and  other  Physiocrats, 
Adam  Smith  believed  that  the  most  important 
economic  principles  were  actually  realized  in  spite 
of  political  hindrances.  He  recognized  also  that 
the  political  system  had  a  life  of  its  own  and  was 
not  simply  as  it  were  a  free  translation  from 
economics.  He  even  spoke  sometimes  as  if  the 
two  systems,  economic  and  political,  ran  best 
separately.    Yet   he  could  not  even  foresee  the 


GOVERNMENT   IS   FOUNDED    ON   OPINION         57 

amount  of  successful  independence  secured  in 
his  own  country  some  fifty  years  after  his  death. 
There  was  not  to  his  mind  any  omnipotence  in 
economic  tendencies  beyond  the  few  elementary 
ones.  Their  benefit  was  extended  to  ''the  pubhc" 
without  any  thought  of  it  on  the  part  of  the 
public ;  it  did  not  proceed  from  collective  wisdom ; 
and  on  the  contrary  'collective  wisdom'  often 
lessened  the  benefit  by  interference.  He  wrote  his 
book  to  persuade  collective  wisdom  to  stand  aside. 
It  stands  aside  in  many  cases  now  where  it  inter- 
fered then;  but  especially  for  the  best  economic 
policy  in  distribution  we  should  want  it  to  be  more 
than  neutral  now.  If  the  economist  should  not 
be  guided  by  public  opinion,  he  should  try  to 
guide  it,  recognizing  that  error  is  possible  which 
he  must  help  to  remove.  Belief  in  the  progress 
of  humanity  and  'evolution  of  society'  must  not 
involve  the  giving  up  of  individual  effort  to  im- 
prove society;  and  one  of  the  best  fields  for  such 
effort  is  the  enhghtenment  of  public  opinion  con- 
cerning the  limits,  method,  and  results  of  econo- 
mic study.  It  is  not  difficult  to  find  '  maxims'  and 
'watch-words'  in  use  which  show  the  darkness  now 
prevailing  in  this  regard.  We  are  told  for  exam- 
ple that  we  need  not  study  any  more  because  our 
conclusions  hold  in  theory  but  not  in  practice.  The 
phrase  thus  used  only  shows,  Hke  many  others, 
the  need  of  more  light;  but  there  is  perhaps 
none  in  which  public  opinion  is  more  nearly  unan- 
imous,— against  us. 


Lecture  III 
"IT  MAY  BE  SO  IN  THEORY" 

It  has  already  been  remarked  that  pubHc  opinion 
is  suspicious  of  economic  theory  as  contradicting 
practice.  In  the  early  years  of  the  18th  century  in 
England  public  opinion  was  shocked  by  the  "Fable 
of  the  Bees"  in  which  Bernard  Mandeville  pro- 
fessed to  show  that  private  vices  were  public 
benefits.  Public  opinion  was  shocked;  and  yet 
Mandeville  did  no  more  than  array  in  an  appear- 
ance of  logic  whole  groups  of  fallacies  that  were 
popular  then  and  are  popular  now.  They  included 
the  fallacies  attacked  so  wittily  by  Bastiat  in  his 
Sophis7nes  Economiques,  especially  under  the  head- 
ing "Things  that  are  seen  and  things  that  are  not 
seen."  How  many  have  said  in  their  hearts  after 
reading  Bastiat's  chapters  on  the  subject:  "All 
this  is  very  well  in  theory,  but  in  practice  I  find 
every  day  that  to  break  windows  is  good  for  trade 
and  the  invention  of  machines  is  bad  for  it?" 
Their  name  is  legion. 

This  is  the  naive  scepticism  of  the  man  in  the 
street;  but  there  is  a  scepticism  of  men  in  the  study 
which  we  cannot  put  aside  by  recommending  a 
course  of  Bastiat.    There  are   certain  theorists 


IT  MAY   BE   SO   IN   THEORY  59 

who  tell  US  that  economic  theories  founded  on  ab- 
stractions cannot  be  true  theories,  and  that  the 
true  must  be  drawn  from  practice  in  the  sense  of 
copying  or  reflecting  it  as  it  is.  There  is  a  cer- 
tain analogy  here  to  Pragmatism  in  Philosophy, 
now  so  confidently  taught  in  many  quarters.  To 
Pragmatism  that  is  the  true  theory  which  serves 
us  in  practice  and  verifies  the  practice.  Its  motto 
is  'Prove  by  practice'  or  even  in  more  homely 
terms  'The  proof  of  the  pudding  is  in  the  eating 
of  it;' — all  our  postulates  are  to  be  working  pos- 
tulates. This  is  likely  to  be  a  popular  philosophy. 
But  there  are  limits  even  to  the  popular  disbelief 
in  abstractions,  for  common  logic  above  all  things 
is  founded  on  professedly  general  principles,  and 
yet  every  one  in  'practice'  trusts  to  it.  In 
Arithmetic,  and  broadly  all  Mathematics,  there  is 
a  testing  of  practice  by  principles  and  not  vice 
versa.  Art  is  allowed  a  liberty  of  selection 
even  in  Impressionism.  It  is  mainly  when  the 
abstraction  relates  to  action  that  the  doubt  comes 
up.  Yet  an  Ethics  that  simply  in  an  uncritical 
way  reflected  popular  conduct  would  hardly  yield 
us  a  conception  of  Duty ;  and  the  chief  part  of  any 
Religion  is  the  controlling  idea  of  a  highest  object 
of  worship  or  regard,  which  is  in  every  case  ideal. 
The  rule  "prove  by  practice"  or  "verify  by 
experience"  needs  careful  interpretation.  Like 
other  max.ims,  it  turns  out  to  be  false  in  some  cases 
true  in  others,  and  therefore  likely  to  be  no  better 
guide    in    Economics   than  "Liberty,    Equahty, 


60  DISTURBING   ELEMENTS 

Fraternity."  We  might  quite  fairly  reply  to  it  by 
Hesiod's  old  proverb  "The  half  is  more  than  the 
whole"  or  the  modern  adage  'The  onlooker  sees 
more  of  the  game  than  the  players.' 

The  notion  at  the  bottom  of  sach  an  exclama- 
tion as  "  All  very  well  in  theory"  is  of  a  piece  with 
the  distinction  of   men   of  practice  and  men  of 
theory,  and  with  the  view  that  the  practical  men 
approaching   (though  seldom  or  never  reaching) 
''rule  of  thumb"  are  superior  to  tnemenof  theory 
who  (it  is  said)  form  preconceived  views  of  a  case 
before  they  deal  with  it.     The  last  are  like  jury- 
men who  have  made  up  their  minds  before  they 
enter  the  box  to  hear  the  evidence.    We  should 
certainly  reject  such  jurymen,  without  a  first  or 
second  admonition.     But  they  are  hardly  in  ques- 
tion.    They  would  not  be  "onlookers"  but  would 
have  their  eyes  away  in  the  clouds.     Are    the 
onlookers  to  have  no  general  principles?     If  Kep- 
ler had  held  none,  he  would  not  have  discovered 
the  orbit  of  the  planets.     He  had  a  preconception, 
though  he  was  a  genuine  onlooker.     Aristotle  is 
sometimes  opposed  to  Plato  as  Realist  to  Idealist ; 
but,  though  Aristotle  is  in  close  touch  with  prac- 
tice, he  never  moves  a  step  without  general  princi- 
ples.   The  deductive  element  enters  into  all  pro- 
gressive science;  it  is  only  wanting  in  Natural  His- 
tory, and  this  is  a  register  of  facts  without  theory. 
Deduction   is   specially    necessary   where    (as   in 
Astronomy  and   largely   in  Political  Philosophy 
and  all  its  branches)  experiment  is  impossible. 


IT  MAY   BE   SO   IN  THEORY  61 

Id  Political  Economy  we  are  making  an  endeav- 
om*  after  a  Science.  Is  our  endeavour  fruitless? 
Must  we  be  content  with  a  register  of  facts? 

The  right  answer  seems  to  be  that  the  motives 
and  actions  of  men  in  regard  to  economy  in  society 
undoubtedly  yield  general  principles ;  they  present 
certain  broad  uniformities  that  have  a  greater 
persistence  and  regularity  than  exist  in  any  other 
group  of  social  facts.  This  is  proved  by  practice 
in  the  sense  of  being  inferred  from  the  known  char- 
acter of  the  great  masses  of  civilized  men.  The  on- 
looker sees  these  uniformities;  to  be  an  economist, 
he  takes  permission  to  look  at  them  (in  the  first 
place)  separately  as  if  they  were  the  only  causes  at 
work.  This  detachment  of  them  is  his  offence  in 
the  eyes  of  the  'practical'  men.  It  is  the  method 
described  as  essential  to  economic  investigation  by 
J.  S.  Mill,  Senior,  Cairnes,  Bagehot,  and  Keynes, 
the  last  summing  up  the  whole  case  sanely  and 
wisely.  It  is  the  method  dictated  (to  use  a 
figure)  by  the  facts  of  human  nature.  A  mere 
record  of  economic  facts  for  generation  after  gen- 
eration, century  after  century,  is  a  natural  history 
of  them,  leaving  us  with  the  barren  result:  What 
is,  is.  What  was,  was.  As  Bagehot  says,  the 
'Whole  Case  method'  presenting  all  facts  means 
a  bewildering  accumulation.  We  shall  have  no 
light  till  we  are  allowed  to  detach  and  select. 

Now  detachment  and  selection  mean  abstrac- 
tion. There  may  be  unwise  selection  and  unwise 
treatment  of  what  is  selected.    But  the  right  to 


62  DISTURBING   ELEMENTS 

select  must  be  conceded;  and  it  involves  the  right 
to  abstract  and,  on  abstraction,  generalize.  The 
facts  do  not  detach  themselves,  and  he  who  de- 
taches and  selects  is  no  longer  the  merely  prac- 
tical man  but  has  begun  to  be  a  man  of  science. 
It  is  true  that  the  theory  which  adds  to  practice 
is  a  theory  that  practice  makes,  or  else  we  live  in 
cloudland.  The  proper  contrast  however  is  not 
between  theory  and  no  theory  but  between  wrong 
and  right  theory.  The  thesis  of  "historical  real- 
ists" is  itself  a  theory. 

Ricardo  is  often  taken  as  the  typical  abstract 
theorist  among  economists.  He  allows  the  accus- 
ation himself;  he  'reallj^  believes'  he  is  too  theo- 
retical; but,  he  adds,  his  friend  Malthus  is ''too 
practical"  looking  at  temporary  effects  while 
Ricardo  looked  at  permanent  ones.  Ricardo's 
aim  was  ''to  elucidate  principles"  and  therefore 
he  "imagined  strong  cases."  In  the  popular 
conception,  too,  Malthus  was  the  practical  man. 
Remember  out  of  what  antecedents  those  two  men 
were  made.  Ricardo  had  passed  a  lifetime  in  bus- 
iness before  he  began  to  theorize,  that  is  to  reflect, 
about  it,  and  Malthus  who  began  his  economic 
writing  with  (by  his  own  admission)  too  abstract 
a  theory  had  had  no  further  acquaintance  with 
business  than  the  fellow  of  a  college  and  curate 
of  a  country  parish  could  acquire  from  somewhat 
slender  opportunities .  in  that  regard.  Prof.  Hol- 
lander once  described  a  theory  of  wages  as  "meta- 
physical"  because  it   relied   on  extended  appli- 


IT  MAY   BE   SO   IN   THEORY  63 

cations  of  the  theory  of  final  utiUty.  In  that  sense 
Ricardo  was  metaphysical ;  he  pushed  abstract  the- 
ories of  value,  cost,  and  currency,  to  a  point  where 
his  more  academical  friend  showed  him  he  was 
out  of  touch  with  actual  experience.  His  remedy, 
however,  was  not  to  give  up  theory  but  to  make 
a  theory  that  embraced  more  of  the  facts,  to  pull 
down  his  barns  and  build  greater,  and  be  more 
concrete. 

On  certain  strata  of  economic  theory,  both  of 
those  economists  agreed.  The  first  principles  on 
which  Adam  Smith  proceeds,  duly  followed  by  his 
saccessors,  are  abstracted  from  human  nature  and 
are  part  of  experience.  The  'constant  uninter- 
rupted desire  of  every  man'  (in  civilized  society) 
to  better  his  own  condition  is  a  fact  of  general 
observation;  it  is  only  too  abstract  if  there  is  a 
denial  of  conflicting  motives  and  an  assertion  of 
the  omnipotence  of  this  one.  Wide  influence  and 
high  probability  are  quite  a  good  enough  founda- 
tion for  economics.  This  principle  of  commercial 
ambition  seems  wider  and  more  uniform  in  its 
sweep  than  any  other  single  principle  in  civilized 
societies,  say  militar}^,  social,  parliamentary  am- 
bition. Provision  for  a  family  and  desire  of  mar- 
riage have  almost  similar  sweep,  along  similar 
ground,and  are  accordingly  taken  up  into  econo- 
mic science  alongside  of  commercial  ambition. 
The  two  together  cover  a  great  part  of  human  life. 
They  are  without  rivals  in  extent  of  influence. 
They  bear  the  test  of  the  ''law  of  averages"  and 


64  DISTURBING   ELEMENTS 

form  the  basis  of  predictions,  of  high  probability. 
No  other  motives  are  (in  a  better  sense  than  the 
old)  ''ruling  motives"  of  whole  societies. 

If  the  practical  man  is  one  who  refuses  all  gen- 
eralizations even  of  this  character,  he  is  one  who 
refuses  all  illumination  but  that  of  the  moment; 
he  is  intellectually  what  the  Cyrenaic  philosopher 
was  ethically,  the  one  living  by  the  light  of  the 
moment  as  the  other  on  the  feeling  of  the  moment. 
If  it  is  answered:  ''No  one  does  this"  then  the 
practical  man  is  granted  to  be  only  a  kind  of 
theoretical  man.  We  all  know  that  it  is  precisely 
those  immersed  in  business  that  are  liable  to  form 
the  most  extravagant  theories  of  business  as  a 
whole,  and  not  only  more  extravagant  but  less 
concrete  than  those  of  the  modern  economist,  in 
the  true  sense  of  concrete. 

It  is  not  desirable  to  settle  the  dispute  by  the 
familiar  compromise  and  say  both  are  right,  the 
practical  man  and  the  man  of  theory.  The  truth 
does  not  always  lie  in  a  compromise.  The  practi- 
cal man  thinks  he  is  right  because  in  the  end  we 
need  to  make  our  theories  concrete  if  we  can. 
But  he  does  not  readily  see  that  the  endeavour  after 
science  is  an  endeavour  after  theories,  general 
principles,  on  the  strength  of  which  posterity  may 
be  expected  to  make  more  progress  than  we  have 
done.  If  the  theories  are  true,  they  are  in  the 
facts,  and  thereby  (if  you  like)  the  man  of  theory 
and  the  man  of  practice  are  proved  to  be  at  one. 
But  the  contention  that  we  should  form  no  theo- 


IT  MAY  BE   SO   IN   THEORY  65 

ries  is  not  to  be  conceded  under  anypretence.  The 
practical  man  himself  abandons  it  in  his  domestic 
economy;  he  has  practical  rules,  and  all  rules 
(even  of  thumb)  have  a  certain  generality.  He  is 
constantly  telling  us  that  ''he  makes  it  a  rule" 
to  do  this  or  that.  In  so  far  as  his  "rule"  is  not 
arbitrary,  it  is  founded  on  abstractions,  drawn  from 
life,  on  the  assumption  that  the  course  of  life 
will  be  influenced  throughout  by  much  the  same 
causes  as  hitherto,  acting  with  much  the  same 
energy,  and  that  other  men  are  very  much  like 
himself  and  what  he  is  likely  to  do  they  are  likely 
to  do.  As  a  rule  he  is  sufficiently  right  for  his 
limited  purposes.  Most  men  succeed  in  making 
a  living  and  keeping  their  house  together  and 
providing  for  the  future. 

What  this  practical  man  does  for  himself  when 
he  makes  his  rules,  the  economist  tries  to  do  wdth 
a  wider  purpose,  for  the  great  body  of  ''practical 
men"  including  his  own  critics.  He  may  have 
greater  difficulties ;  but  his  problem  does  not  seem 
irrational. 

Sometimes  the  antipathy  to  general  theories  in 
economics  rests  on  the  notion  that  when  j^ou  re- 
duce the  present  system  to  general  principles  you 
are  giving  to  it  a  sort  of  approval  and  vindication. 
You  are  certainly  showing  it  to  be  rational  enough 
to  hold  itself  together.  But  it  seems  clearly  to 
appear  that  the  sufferings  and  drawbacks  of  large 
masses  of  individuals  (to  put  the  strongest  case) 
are  independent  of  the  principles  themselves  and 


66  DISTURBING   ELEMENTS 

are  part  of  the  polity  and  policy  of  nations  rather 
than  of  their  economy;  and  in  vindicating  the 
principles  you  are  not  vindicating  the  violence. 

We  can  point  in  our  own  time  to  economists  who 
agree  in  accepting  the  name  and  who  belong  to  the 
most  widely  differing  political  classes,  Conserva- 
tives, Democrats,  Socialists,  Anarchists.  This 
agreement  shows  that  the  method  of  general  prin- 
ciples common  to  them  all  is  in  intention  a  really 
scientific  one,  not  a  contrivance  of  the  special 
pleader.  It  is  sometimes  said  that  the  sceptic 
makes  the  best  historian.  It  may  be  doubted  if 
the  sceptic  ever  finds  his  way  to  the  depths  of 
human  nature.  But  what  is  meant  by  the  dic- 
tum is  sound.  It  is  true  for  economics  as  well  as 
history.  In  economics,  too,  the  best  student 
abstracts  from  his  creed  of  social  reform  when  he  is 
working  out  his  economic  problems;  he  must 
study  them  without  passion  or  prejudice,  sine 
ira  et  studio,  let  us  hope  with  better  success  than 
the  immortal  author  of  that  phrase. 

The  late  Henry  Sidgwick  showed  as  in  his  own 
person  that  to  be  a  good  economist  a  man  did 
well  to  be  more  than  an  economist.  This  is  not 
inconsistent  with  belief  in  the  virtue  of  unbiassed 
abstraction,  for  we  only  begin  with  the  abstraction, 
and  after  we  have  formulated  our  general  principles 
we  have  to  see  whether,  or  how  far,  they  are  af- 
fected in  ordinary  life  by  quite  other  principles, 
whether  for  example  commercial  ambition  is 
crossed  by  other  motives,  extra-economic  or  anti- 


IT  MAY   BE   SO   IN   THEORY  67 

economic.  Some  of  the  most  elementary  (say  of 
value  or  the  currency)  are  hardly  modified  at  all. 
Many  others  are  gravely  modified.  If  we  have  no 
familiarity  with  the  non-economic  principles,  we 
cannot  judge  fairly  of  the  effect  they  are  likely 
to  produce.  Some  of  us  are  skilful  in  dealing  with 
the  economic  principles,  and  less  skilful  in  track- 
ing out  their  modifications  in  concrete  human  life. 

In  any  case  our  task  is  a  twofold  task;  and 
to  make  it  only  onefold  is  either  to  have  the  con- 
crete unillumined  by  principles  or  the  principles 
un-fructified  by  application.  'Right  in  theory, 
wrong  in  practice'  would  at  the  worst,  mean  that 
the  principles  are  destroyed  when  applied  and  were 
better  not  made;  at  best  it  would  mean  that  they 
look  exceedingly  well  on  paper  and  it  were  a  pity 
to  spoil  them  by  application.  If,  however,  they 
are  right  (or  correct)  as  theories,  they  represent 
an  actual  element  in  the  facts.  They  point  to  one 
ascertained  body  of  true  causes  at  work  in  human 
societies.  It  may  be  a  harder  problem  to  find  the 
others.  We  need  not  despair  of  the  microcosm  of 
human  society,  in  this  regard,  as  we  do  not  de- 
spair of  the  greater  world.  What  we  reduce  to 
principles  is  a  very  small  part  of  the  whole  in  both 
cases,  but  not  any  smaller  in  the  human  microcosm 
than  in  the  material  macrocosm,  and  at  least  as 
much  within  our  ken. 

What  is  the  relation  of  the  various  other  influ- 
ences and  elements  in  human  society  to  the  eco- 
nomical element?     They  all  touch  it  even  if  they 


68  DISTURBING   ELEMENTS 

do  not  (as  in  the  Materialistic  view  of  history) 
all  spring  from  it.  Are  they  as  much  a  condition 
of  it  as  it  is  of  them? 

It  was  Comte's  view  that  the  elements  of  Society 
were  so  commingled  that  they  could  not  be  stud- 
ied separately.  Therefore  he  rejected  Political 
Economy  and  Psychology  as  separate  studies. 
But,  if  you  refuse  the  separate  study,  you  cannot 
see  the  wood  for  the  trees.  We  may  admit  the 
closeness  of  the  social  bonds,  and  admit  that  in 
dealing  with  them  we  find  the  categories  not  only 
of  Physics  ('dynamics'  and  'statics')  bat  even  of 
Biology  not  quite  adequate.  The  organization  of 
bees  and  ants  is  more  easily  reduced  to  rule  than 
the  organization  of  human  society.  The  kind  of 
development  shown  by  human  history,  the  kind 
of  progress  there  shown,  cannot  be  paralleled  in 
any  natural  history  of  animals.  Yet  human 
thought  and  will  are  not  simply  varium  et  mu- 
tabile  semper;  the  resulting  actions  show  uniform- 
ities not  planned  out  but  not  irrational,  tenden- 
cies not  predictable  a  priori  but  discoverable  and 
recognizable  when  the  facts  are  scrutinized.  It 
is  surely  well  for  us  to  subject  the  most  uniform  of 
the  uniformities  to  a  closer  scrutiny  than  the  rest 
and  be  thankful  we  have  any  such  to  scrutinize. 
Economic  causes  may  not  be  the  key  of  all  human . 
progress;  but  they  may  help  us  to  find  the  key. 
We  may  well  try,  then,  to  reduce  them  to  order 
first. 

It  was  said  in  relation  to  Ricardo,  and  Malthus, 


IT  MAY   BE    SO   IN   THEORY  69 

that  abstract  principles  might  be  too  abstract  to 
be  in  touch  with  practical  life  and  might  need  to 
be  made  more  concrete.  Interpret  the  'practical 
man's '  protest  in  this  sense,  and  it  is  not  deserv- 
ing of  complete  rejection.  To  make  this  conces- 
sion does  not  destroy  the  contrast  between  un- 
generalized  and  generalized  practice,  but  it  lessens 
the  distance  between  the  disputants  and  represents 
the  best  we  can  offer  in  the  way  of  an  eirenicon. 
To  make  a  principle  more  practical  is  sometimes 
(paradoxically)  to  make  it  wider, — to  make  it 
embrace  more  cases  in  concrete  human  life. 
When  Ricardo  spoke  of  all  value  as  depending 
ing  on  cost  he  explained  that  he  was  knowingly 
neglecting  cases  where  it  had  nothing  to  do  with 
cost.  His  friend's  generalization,  limitation  of 
supply,  embraced  all  the  cases  and  was  more 
"practical."  Ricardo's  principle  embraced  fewer 
cases,  even  if  they  were  the  more  complicated 
ones,  and  the  more  characteristic  of  the  practical 
life  he  knew  best.  This  was  perhaps  his  infirmity 
rather  than  the  tendency  to  be  'too  abstract.' 
His  theory  of  value  applied  to  articles  freely 
produced;  and  Marx  has  applied  it  so  with  much 
less  regard  than  Ricardo  for  any  other  cases  of 
value.  But  the  other  cases  remain  with  us.  There 
are  things  such  as  gold,  to  say  nothing  of  land 
itself,  where  the  cost  does  not  play  the  controlling 
part  in  the  extension  or  limitation  of  supply; 
and  there  are  no  signs  of  the  disappearance 
of  such   cases  from   our   civilization;   they   will 


70  DISTURBING   ELEMENTS 

stand  alongside  the  others  while  the  moon  en- 
dureth.  We  must  at  least  therefore  begin  with 
the  wider  notion  and  it  will  be  the  more  widely 
true  for  being  more  ''abstract."  What  then  is 
the  more  concrete?  We  may  answer  that,  of  two 
general  principles  the  more  abstract  has  more 
individuals  under  it  but  fewer  of  their  qualities; 
the  more  concrete  has  the  converse.  It  is  as  in  the 
logical  distinction  of  generic  and  specific.  To  say 
of  things  that  they  ''are"  is  to  use  the  widest 
abstraction  and  specify  the  fewest  qualities.  The 
more  qualities  are  taken  up  into  a  generalization, 
the  more  concrete  it  is.  But,  if  a  generalization 
embraces  the  greatest  number  of  qualities  and  the 
fewest  individuals,  its  concreteness  will  not  save 
it  from  being  useless.  In  regard  to  human  beings, 
especially,  we  desire  to  bnow  first  of  all  the  quali- 
ties in  which  they  agree  rather  than  differ, — 
including  those  in  which  they  agree  to  differ,  the 
foundation  of  exchanges. 

If  the  propounder  of  the  wider  generalization 
is  to  be  the  "more  abstract  thinker,"  it  appears 
that  Malthus  is  so,  and  not  Ricardo,  in  their  re- 
spective theories  of  value.  It  appears  also  that 
popular  usage,  not  condemning  generality,  visits 
with  opprobrium  the  abstraction  necessary  to  the 
making  of  it. 

Observe  what  Ricardo  says  about  himself,  as 
already  quoted.  He  means  to  elucidate  prin- 
ciples and  therefore  he  imagines  strong  cases.  We 
infer  that  the  contrast  between  him  and  his  friend 


IT  MAY   BE   SO   IN   THEORY  71 

was  not  in  their  acceptance  or  rejection  of  general 
principles  but  in  their  habits  of  mind.  Malthus 
was  careful  and  troubled  about  the  applications, 
and  (according  to  his  friend)  was  in  too  great  haste 
to  see  how  much  or  little  the  principles  were  modi- 
fied by  the  other  facts  of  life  and  business.  It 
seems  as  if  Ricardo  was  content  to  leave  to  others 
the  question  of  modification.  Though  he  was  a 
public  man,  he  was  more  at  home  in  the  study  than 
in  public  meetings  and  committees.  He  fought 
against  this  very  virtuous  failing;  he  spoke  in 
Parliament,  sat  on  Committees,  subscribed  to 
Robert  Owen's  schemes  and  made  himself  useful 
in  promoting  Savings  Banks.  This  effort  gives  us 
greater  respect  for  his  character.  But  except  in  his 
view  of  machinery  it  led  to  little  change  in  his 
theorizing  and  it  was  probably  better  so.  There 
are  few  who  are  capable  of  such  theorizing,  and 
many  who  can  'serve  tables.'  For  the  building 
up  of  a  complete  Political  Economy  we  need 
both  kinds  of  men.  They  do  their  work  best  when 
they  divide  the  labour,  taking  care  to  learn  results 
from  each  other. 

In  the  days  of  Ricardo,  and  Malthus  there  was 
a  great  deal  less  of  this  cooperation  than  there  is 
now,  largely  because  there  were  fewer  ''hod-men" 
then  for  the  economist  to  use,  systematic  statis- 
tics being  a  phenomenon  of  later  origin.  The  re- 
sult was  that  the  economist  was  always  more  or 
less  closely  joined  to  his  abstractions.  James 
Mill  is  counted  the  most  abstract  of  all,  and 


72  DISTURBING   ELEMENTS 

MacCulloch  next  unto  him,  both  of  them  disciples 
of  Ricardo.  But  even  Malthus  has  the  character- 
istic. His  name  is  associated  not  only  with  the 
theory  of  Population  but  with  that  of  Rent  and 
(indirectly)  of  Wages.  In  what  degree  were  those 
unduly  abstract? 

The  first  as  you  know  was  the  statement  of 
a  tendency  of  human  nature  limited  by  condi- 
tions of  physical  nature  and  also  by  conditions  of 
human  nature  not  apart  from  human  will.  In  this 
respect  it  was  one  of  the  most  practical  of  eco- 
nomic theories;  its  conditions  were  realized  tho'  in 
widely  different  degrees,  among  barbarous  peoples 
and  civilized  alike.  It  was  not  a  generalization 
confined,  in  Bagehot's  fashion,  to  modern  com- 
mercial peoples;  indeed  many  tell  us  it  has  no 
place  with  them.  In  this  respect  it  is  a  wider 
generalization  than  Adam  Smith's  of  commercial 
ambition.  As  fully  stated,  checks  and  all,  it  not 
only  comprehends  more  of  the  units  but  also  more 
of  their  qualities.  It  is  in  this  sense  more  con- 
crete. It  need  not  be  held  that  the  statement  as 
Malthus  gave  it  was  quite  exhaustive.  The  notion 
of  voluntary  restraint,  for  example,  must  take  the 
place  of  moral  restraint ;  and  there  are  cases  where 
physical  and  physiological  causes  are  at  work 
that  escape  his  formula.  But,  broadly  speaking, 
it  has  been  a  successful  theory. 

The  fortunes  of  the  theory  of  Rent  have  been 
different.  The  theory  itself  was  not  at  first  of 
the  same  comprehensive  character.     It  was  sug- 


IT  MAY   BE   SO   IN   THEORY  73 

gested  to  others  besides  Malthus  and  Ricardo  by 
the  conditions  of  farming  in  Scotland  and  Eng- 
land at  the  end  of  the  18th  and  beginning  of  the 
19th  century;  and  the  formula  dealt  with  the  land 
last  taken  into  cultivation,  at  a  time  when  the 
variations  of  corn  prices  made  lands  go  out  of  cul- 
tivation and  come  back  into  it  in  a  startling  way 
that  impressed  all  observers.  The  land  on  the 
margin  that  was  just  barely  profitable  was  taken 
as  the  measure  of  the  profitableness  of  all  those 
above;  what  they  could  yield  as  rent  was  the  dif- 
ference between  their  profitableness  and  the  pro- 
fitableness of  this  lowest.  Professor  Hollander 
shows  us  how  the  theorem  was  gradually  cleared 
of  its  first  narrowness.  In  intensive  cultivation 
the  last  dose  of  capital,  profitably  applied  at  all,  was 
the  measure  of  the  profitableness  of  the  other  do- 
ses. It  is  of  course  a  question  not  merely  of  prices 
but  of  fertilities,  and  not  merely  of  fertilities  and 
agricultural  purposes,  but  of  net  advantages  for 
all  purposes.  The  formula  holds  even  where  there 
is  no  private  ownership,  no  landlord  standing 
over  a  tenant.  But  at  first  it  appeared  as  a  con- 
sequence of  the  growth  of  population  pushing 
forward  the  extensive  cultivation  of  inferior  lands 
or  the  intensive  cultivation,  at  greater  cost,  of  the 
superior  lands.  It  was  prejudiced  and  encumbered 
by  a  quite  unnecessary  appearance  of  history  and 
by  superfluous  positive  prediction.  In  the  main 
(as  we  often  hear  in  our  time,  from  nationalizers 
of  the  land)  it  is  a  theory  that  tells  against  land- 


74  DISTURBING   ELEMENTS 

lords,  whereas  the  theory  of  the  wages  fund  told 
in  favour  of  the  employers.  The  economic  impor- 
tance of  the  theory  lies  partly  in  its  essential 
identity  with  the  theory  of  final  utility.  Rent  is 
measured  by  final  fertility;  and  in  the  more  gen- 
eral theory,  too,  we  measure  from  a  lowest  item 
upwards.  Prof.  Hollander  reminds  us  that  we  may 
reach  the  agricultural  margin  of  rent  without 
reaching  the  margin  of  profitableness  depending 
on  other  uses  than  agriculture;  we  may  not  have 
reached  the  really  lowest  item  from  which  to 
measure  the  others.  This  consideration  simply 
shifts  the  application  of  the  differential  theory 
from  agricultural  uses  to  profitable  uses  in  gen- 
eral. The  theory  becomes  in  this  way  broader  and 
really  more  effectively  '  practical ;'  it  covers  more 
of  the  actual  cases  of  ordinary  experience.  The 
limits  of  its  usefulness  are  the  limits  of  the  useful- 
ness of  the  theory  of  final  utility  in  general.  The 
marginal  item  or  the  'final'  utility  or  lowest 
use  is  often  regarded  as  being  what  it  is  not.  It 
is  not  a  cause  but  a  measure;  and  'determining' 
means  only  defining.  Until  we  go  on  to  the 
cause,  we  have  a  sense  of  incompleteness,  as  if  we 
had  only  half  of  the  case  before  us. 

While  in  this  way  we  can  regard  the  theory  of 
Rent  as  only  an  instance  of  a  broader  principle,  it 
is  also  true  that  the  other  instances  of  the  broader 
principle  may  be  described  as  analogous  to 
Rent,  wherever  the  positing  of  the  lowest  item 
results    in   a   graduated   series    of    items   rising 


IT  MAY   BE    SO   IN   THEORY  75 

above  it.  Logically  or  pedagogically  it  may  be 
useful  to  speak  of  a  rent  of  ability  or  a  consumer's 
rent.  By  long  usage,  however,  rent  has  become 
associated  with  facts  given  by  nature  and  unalter- 
able by  human  will,  and  we  should  be  careful  to 
relegate  as  few  phenomena  as  possible  to  this  in- 
exorable fate.  It  would  be  ''wrong  in  practice" 
to  do  otherwise.  As  it  is,  the  practical  man  might 
find  advantage  in  keeping  this  economic  notion 
of  rent  in  his  mind  when  dealing  with  many  aspects 
even  of  modern  city  life.  It  is  essentially  as  true 
now  as  in  the  days  of  the  Classical  Economists; 
and  many  seem  to  find  it  easier  to  grasp  than  the 
wider  notion  of  final  utility,  a  perfectly  true 
abstraction  but  more  abstract  and  therefore  more 
troublesome  to  the  man  in  the  street. 

The  fortunes  of  the  theory  of  the  Wages  Fund 
have  been  very  different.  It  is  the  crowning  in- 
stance of  an  untrue  abstraction;  but  it  w^as  not 
from  being  an  abstraction  that  it  was  untrue.  It 
was  "wrong  in  practice"  just  because  it  was  not 
"very  well  in  theory";  and  it  has  probably  done 
more  injury  to  the  reputation  of  economic  theory 
than  any  other  generalization  ever  received  into 
economic  textbooks  and  then  expunged  from  them. 

The  theory  of  Rent  began  by  a  deduction  from 
the  Malthusian  principle ;  the  theory  of  the  Wages 
Fund  makes  appeal  to  that  principle  also.  It  runs 
as  follows:  Average  wages  depend  on  the  pro- 
portion between  the  total  numbers  of  the  labour- 
ing population  and  the  total  capital  devoted  to  the 


76  DISTURBING   ELEMENTS 

employment  of  labour.  This  is  a  fairer  statement 
than  the  abbreviation  which  runs  so:  Wages 
depend  on  the  ratio  of  population  to  capital, — for  it 
is  not  all  the  population  that  is  taken,  nor  all  the 
capital.  But,  while  every  one  would  doubt  the 
short  statement,  most  of  us  would  only  believe 
the  long  one  as  we  believe  an  arithmetical  truism. 
Divide  the  total  wages  paid  to  the  wages-earners 
by  the  number  of  the  wages-earners,  and  you  get 
a  figure  that  contains  no  more  than  you  knew  im- 
plicitly already.  There  is  a  further  interpreta- 
tion however;  and  the  interpretation  is  part  of 
the  theorem;  the  total  of  the  capital  that  pays 
wages  is  a  fund  that  at  any  given  time  could  not 
be  more  or  less  than  the  figure  found.  It  is  a  sum 
not  modifiable  by  the  parties  concerned;  and  there- 
fore wages  can  only  be  raised  by  the  reduction  of 
the  population  or  the  increase  of  the  capital.  That 
part  of  the  total  capital  devoted  to  wages  remains 
the  same  proportion  of  the  whole;  if  it  is  to  be 
increased  the  whole  must  be  increased  first.  Hu- 
man will  does  not  enter,  appearances  notwith- 
standing. It  has  entered,  in  the  increase  or  de- 
crease of  population  and  increase  or  decrease  of 
capital,  but  it  does  not  enter  in  the  determination 
of  wages  at  any  given  time;  that  comes  not  from 
the  will  of  man,  but  from  the  ratio  between  two 
quantities,  and  the  ratio  is  a  fixed  datum. 

Put  in  this  way  the  theory  is  to  us  unbelievable, 
and  we  can  hardly  conceive  how  it  lived  forty 
years.    The  rigidity,  the  fixed  character  of  the 


IT  MAY   BE    SO   IN   THEORY  77 

fund,  is  the  chief  stumbling  block.  But,  so  far 
as  we  can  ever  be  sure  of  a  bias,  we  may  see  here 
the  bias  of  a  desire  to  be  very  practical  indeed. 
Without  the  rigidity  the  theory  w^as  of  no  de- 
cisive use  in  the  dispute  between  labour  and  cap- 
ital. We  must  not  say  of  no  use  at  all  to  any 
body.  The  re- statement  of  Cairnes  is  useful 
to  an  economist.  Since  Mill  gave  up  the  theory, 
after  stating  it  in  more  absolute  terms  than  its 
authors,  economists  have  been  gathering  up  the 
fragments  that  remain,  that  nothing  be  lost. 
Even  Professor  Taussig  and  Professor  Bohm 
Bawerk  may  be  seen  gleaning  in  that  field.  But 
the  old  unrevised  theory  of  a  Wages  Fund  was  one 
of  the  rare  instances  where  the  practical  men  had 
a  good  case  against  the  theorists.  So  far  as  the 
working  classes  found  articulate  voice  at  that  date, 
they  protested:  ''If  Political  Economy  is  against 
us,  so  much  the  worse  for  Political  Economy." 
The  employing  class  were  the  articulate  practical 
men,  and  they  naturally  thought  that  a  Daniel 
had  come  to  judgment,  that  the  economists  had 
found  a  really  practical  principle  at  last,  and  at 
last  were  talking  "sense,  absolute  sense." 

The  principle  was  indeed  too  hastily  practical. 
The  major  as  distinguished  from  the  minor  eco- 
nomists had  been  content  even  in  those  forty 
years  with  a  more  general  theory  of  the  relation  of 
wages  to  capital.  They  believed  in  a  dependence 
but  within  limits  hard  to  define.  Wages  is  a  par- 
ticularly concrete  problem.     A  theory  of  it  could 


78  DISTURBING  ELEMENTS 

scarcely  be  formulated  to  advantage  till  labour 
had  shown  all  that  was  in  it  by  becoming  organized 
and  beginning  collective  bargaining.  But  the 
Wages  Fund  theory  was  brought  forward  in  la- 
bour's most  chaotic  days.  Even  now,  when  the- 
ories of  wages  have  succeeded  each  other,  tried 
and  found  wanting,  in  a  not  unfruitful  tentative 
manner,  we  are  finding  it  better  to  clear  the 
ground  by  theories  of  interest  and  profits  than  to 
take  this  hardest  of  problems  first. 

We  have  not  dwelt  on  the  theory  of  a  Wages 
Fund  in  order  to  discuss  the  merits  of  it  but  in 
order  to  illustrate  the  relation  of  theory  and  prac- 
tice. The  opposition  to  such  a  theory  on  the  ground 
of  a  variance  between  theory  and  practice  is  not 
the  same  as  an  objection  to  it  on  the  ground  of 
excessive  abstractness.  The  remedy  was  not  to 
make  it  more  concrete;  it  was  too  concrete;  as  a 
theory,  it  tried  to  cover  more  details  than  the  theo- 
rist was  competent  at  that  time  to  cover  with  any 
theory.  The  application  to  concrete  facts  may 
show  the  defects  in  an  abstract  theory,  but  the 
right  \)heory  is  not  necessarily  itself  more  concrete, 
only  more  in  accordance  or  harmony  with  the  con- 
crete facts  when  it  is  placed  among  them.  In  this 
case  it  was  made  to  include  concrete  facts  that 
were  not  as  stated.  The  proper  opposition  is  thus 
between  a  theory  which  as  such  is  more  or  less 
abstract  and  the  successful  or  unsuccessful  ap- 
plication  of  such  a  theory  to  the  concrete  facts  of 
life;  it  is  not  properly  an  opposition  between  an 


IT  MAY  BE   SO   IN   THEORY  79 

abstract  theory  and  a  concrete  one.  A  right 
theory  fits  the  concrete  facts  better  than  a  wrong 
one,  whether  it  is  itself  concrete  or  not.  If  it 
came  out  of  them  or  was  suggested  by  them,  it 
ought  to  be  replaceable  among  them  with  the  least 
possible  injury  of  either  party. 

As  an  engine  of  public  debate  (always  a  delicate 
position  for  an  economic  theory)  the  theory  of  a 
Wages  Fund  was  misused  because  like  some  other 
economic  generalizations  it  involved  the  hypoth- 
esis of  too  nice  an  equilibrium  of  the  forces  re- 
sulting from  commercial  ambition  and  the  strug- 
gle for  existence.  To  say  positively  that  such  a 
nice  balance  must  always  exist  and  exists  now,  is 
to  neglect  the  hypothetical  character  of  economic 
theories;  they  assert  tendencies,  and  their  holders 
are  (or  ought  to  be)  aware  of  the  plurality  of  ten- 
dencies. Economic  tendencies  are  not  omnipotent 
though  they  are  likely  on  the  whole  to  be  stronger 
than  any  others;  but  assuming  that  MacCulloch 
and  Fawcett  were  satisfied  with  the  correctness 
of  their  formula  they  were  not  justified  in  more 
than  a  warning  to  the  workmen, — say  to  this  effect : 
''You  are  taking  action  which  will  be  more  or 
less  directly  in  the  face  of  certain  economic  ten- 
dencies, and  your  course  is  not  likely  to  be  smooth." 
The  men  might  have  answered:  ''We  accept  your 
warning,  but  we  take  the  risk."  In  adopting  such 
an  attitude  both  the  disputants  would  have  been 
within  their  rights. 

When  the  economist  is  led  to  turn  his  principles 
nto  practical  maxims  of  conduct,  he  is  tempted 


80  DISTUKBING   ELEMENTS 

into  that  dogmatism  which  is  the  usual  charac- 
teristic of  the  utterers  of  practical  maxims. 

Take  the  question  of  Free  Trade,  one  of  the 
most  troublesome  in  practice,  as  the  question  of 
wages  is  in  theory.  The  economist  can  only  warn  the 
practical  men,  politicians  or  otherwise,  that  Pro- 
tection tends  to  penury,  that  there  are  certain 
economic  tendencies  at  work  which  will  fight  against 
the  enrichment  of  a  country  under  Protection. 
The  practical  men  may  answer  that  there  are 
many  other  principles  at  work  in  the  world  besides 
the  economic  and  that  the  sacrifice  of  wealth  is 
worth  making.  The  most  orthodox  economists 
cannot  silence  the  practical  men  who  admit  the 
sacrifice  and  choose  it  rather.  Whether  the  sacri- 
fice is  really  worth  making  is  a  matter  of  opinion, 
and  at  that  point  the  discussion  ceases  to  be 
academical.  On  the  other  hand  if  the  practical 
man  denies  the  existence  of  the  sacrifice  he  must 
give  economic  reasons  or  he  can  have  no  quarter. 
Of  the  two  it  is  perhaps  more  often  the  practical 
man  that  magnifies  his  office;  but  that  too  is  a 
matter  of  opinion. 

Some  practical  men,  not  the  most  thoughtless 
by  any  means,  will  tell  us  that  it  is  all  a  matter  of 
common  sense  and  our  differences  from  them  are 
chiefly  about  words.  No  doubt  it  is  all  a  matter 
of  common  sense;  all  science  is  common  sense, 
made  a  little  more  exact  than  it  is  on  the  street. 
But,  in  regard  to  verbal  disputes,  appearances  are 
deceitful.    John  Mill  remarks  somewhere  that  dis- 


IT  MAY   BE   SO   IN   THEORY  81 

putes  about  words  are  usually  found  to  be  about 
things.  If  the  reference  of  the  aforesaid  practical 
men  is  to  our  disputes  about  definitions,  the  prac- 
tical men  will  discover  that  such  disputes  come  at 
the  end  of  a  long  debate  on  more  vital  matters. 
Definitions  are  oftener  perfected  as  the  result  of  a 
true  theory  than  as  a  condition  of  it ;  and  the  occa- 
sional assistance  given  towards  the  clearness  of  a 
theory  by  a  clear  definition  does  not  make  the 
definition  equivalent  to  the  theory  or  superior  to 
it.  Were  it  not  so,  we  might  have  rules  for  the 
attainment  of  right  theories.  But  to  light  upon 
right  theories  is  as  much  the  reward  of  high  talent 
in  economics  as  anywhere  else.  The  question  of 
method  in  a  sense  settles  itself  for  each  serious 
student.  It  is  possible  to  give  rules  for  testing 
the  generalization  once  made,  but  not  so  easy  (if 
at  all  possible)  to  give  rules  for  the  finding  of  it  in 
the  first  instance.  How  you  get  it  will  in  the  end 
depend  on  the  manner  of  man  you  are.  It  may 
come  into  your  mind  as  an  inspiration.  It  is  an 
inspiration  more  likely  to  occur  to  a  practised 
than  to  an  unpractised  mind ;  but  it  is  not  given 
to  every  economist,  any  more  than  to  every  prac- 
tical man,  to  put  two  and  two  together. 

The  conclusion  of  the  whole  matter  may  be  so 
described.  The  gibe  of  the  practical  man  "It  is 
all  very  well  in  theory"  may  be  taken  up  in  earnest 
as'  an  exhortation  to  the  theorist  to  test  his  theory 
and  apply  it,  and  trace  the  modifications  of  it  in 
the  complications  of  the  world  we  live  in.    This 


82  DISTUKBING   ELEMENTS 

was  done  both  by  Malthus  and  by  Darwin.  The 
strength  of  both  men  was  shown  in  the  application 
as  well  as  in  the  theory;  but  what  gives  them  their 
high  place,  in  successful  speculation  of  the  scien- 
tific sort,  was  not  simply  their  mastery  of  details; 
it  was  the  light  they  threw  on  the  details  by  their 
master  principle  itself.  In  regard  to  the  neces- 
sity of  theory  there  can  be  no  compromise  what- 
ever. 


Lecture  IV 
"FIGURES  CAN  PROVE  ANYTHING" 

The  discussions  of  economists  are  not  merely 
verbal.  Still,  since  language  is  as  helpful  to 
thought  as  the  body  to  the  mind,  we  have  to  use 
it ;  and  we  are  as  liable  as  other  people  to  be  led  in 
triumph  by  our  own  figures  of  speech.  In  this 
sense  as  well  as  the  statistical,  '' figures  can  prove 
anything."  Metaphors  are  so  convenient  for 
purposes  of  exposition  that  we  may  now  and  again 
forget  that  a  metaphor,  conveying  to  ourselves 
no  profounder  analogy  than  the  more  modest 
simile,  usually'-  counts  for  more  with  our  hearers; 
its  figurativeness  does  not  stand  confessed  on  the 
face  of  it. 

We  need  not  make  a  vow  to  avoid  all  metaphors. 
We  could  not  keep  such  a  vow.  Language  is  full 
of  them;  human  speech  is  a  mass  of  mixed  meta- 
phors. Examine  any  sentence  philologically  and 
this  appears.  Moreover  language  proceeds  from 
the  lower  to  the  higher  (the  spirit  was  the  breath, 
a  corporation  is  from  corpus,  a  material  body), 
it  passes  from  the  well  known  to  the  dimly  known, 
from  the  easy  to  the  hard.  To  interpret  the  hard 
by  the  easy  does  not  mean  to  reduce  it  to  the 


84  DISTUEBING   ELEMENTS 

easy,  or  it  would  not  be  worth  the  doing.  We 
do  not  want  to  explain  away  but  to  express  our 
difficulties.  Hence  we  are  engaged  in  a  perpet- 
ual struggle  with  the  imperfections  of  language, 
from  the  nature  of  the  case  never  to  be  removed 
if  sometimes  to  be  overcome. 

How  has  Political  Economy  fared  in  this  strug- 
gle? Every  discussion  exemplifies  it,  the  pre- 
sent included.  The  invention  in  economics 
of  technical  terms  depends  for  its  success  on  a 
general  agreement  to  use  them,  and  they  must 
first  be  defined  in  terms  of  ordinary  speech  present- 
ing the  ordinary  difficulties.  The  technical  terms 
of  other  studies  stand  temptingly  near.  Scien- 
tific metaphors  in  particular  have  exerted  no  little 
influence  on  economic  doctrine. 

It  was  not  surprising  that  in  the  beginning  of 
a  new  science  all  possible  aids  should  be  borrowed 
from  the  sciences  already  existing;  and  yet,  as 
few  of  these  in  the  18th  century  related  to  man,  their 
terms  were  not  likely  to  be  adequate.  In  the 
Physiocratic  conception  of  it,  Political  Economy 
was  almost  a  branch  of  agriculture,  or  at  least 
"modelled  on  the  physical  sciences"  concerned 
therewith.  The  idea  was  that  man  in  society 
should  conform  to  the  physical  conditions  neces- 
sary to  secure  the  building  up  of  the  ideally  best 
society,  VOrdre  Naturel,  just  as  in  navigation  he 
needs  to  employ  such  laws  of  nature  as  are  a  con- 
dition of  sound  navigation.  The  ''natural  order" 
of  society  is  a  conception  founded,  like  natural 


FIGUKES  CAN   PROVE   ANYTHING  85 

right,  on  the  ''law  of  nature,"  which  is  rather  a 
metaphysical  than  a  physical  conception.  Tt  is 
abstract  and  a  priori  if  any  conception  in  social 
philosophy  ever  was  such;  and  the  conception 
clung  affectionately  to  political  philosophy  till 
the  beginning  of  the  19th  century.  The  presence 
of  it  in  the  economics  of  Adam  Smith,  Burke,  etc., 
has  been  often  remarked.  ''Natural  liberty," 
for  example,  implies  some  such  conception.  But 
the  ''natural  laws"  of  the  Physiocrats  may  be  said 
to  have  stolen  the  advantage  of  two  metaphors 
in  one,  for  the  "nature"  was  a  philosophical  figure 
and  the  term  "laws"  owed  part  of  its  impressive- 
ness  to  the  suggested  analogy  of  the  physical 
sciences.  It  perhaps  suggested  most  typicaUj/  the 
law  of  gravitation  as  more  obvious  and  irresistible 
than  any  other.  The  Physiocrats  liked  to  convey 
the  notion  that  their  economic  principles  were 
also  irresistible.  Also,  however,  is  not  likewise. 
"Your  father,  my  lord,  was  a  judge;  you  are  a 
judge  also,  but  not  likewise."  It  may  be  doubted 
if  we  should  call  economic  principles  laws,  (a) 
not  laws  of  nature  in  the  metaphysical  sense,  for 
the  truth  in  that  notion  of  nature  is  better  ex- 
pressed otherwise,  (b)  not  scientific  laws,  for  that 
suggests  physical  science  and  (c)  not  laws  sim- 
pliciter  for  that  might  suggest  a  prescription  of 
the  legislature  or  the  statute  book.  Where  the 
binding  force  is  spiritual,  it  cannot  safely  be  com- 
pared to  the  attraction  of  particles  or  to  the  path 
of  a  projectile  through  space,  nor  can  the  resulting 


86  DISTURBING   ELEMENTS 

social  order  be  properly  compared  with  the  contri- 
vances of  mechanical  art.  Of  course  we  need  not 
blame  our  economic  authors  for  using  any  and 
every  scientific  metaphor.  There  is  no  harm  in 
speaking  with  Malthus  of  a  ruling  motive  as  'Hhe 
mainspring  of  the  great  machine"  or  with  Casaux 
of  the  ''mechanism  of  societies."  Adam  Smith 
says  that  a  philosophical  system  is  an  imaginary 
machine  that  endeavours  in  fancy  to  connect 
movements  already  existing  in  reality.  He  speaks 
of  the  Machine  of  the  Universe.  Such  metaphors 
are  like  the  Apocryphal  writings  as  distinguished 
from  the  Canon;  they  may  be  used  for  example 
or  instruction,  but  we  are  not  to  apply  them  to 
establish  any  doctrine. 

They  have  been  freely  used  from  the  first. 
One  of  the  oldest  of  economic  metaphors  is  that  of 
the  balance  of  trade.  It  should  have  the  benefit 
of  the  doubt ;  it  may  be  simply  the  term  of  book- 
keeping, which  is  a  phase  of  economic  life  itself. 
But  "conflicting  forces"  could  hardly  be  other 
than  a  physical  metaphor.  ''Equilibrium"  seems 
harmless,  but  it  suggests  "brought  to  rest," 
while  "tending  to  equilibrium,"  as  was  long  ago 
remarked,  brings  up  the  notion  of  storm  instead 
of  rest,  a  group  of  physical  elements  in  con- 
flict. A  social  equilibrium  is  a  rare  occurrence  if 
it  means  absolute  rest,  and  tendency  towards  it 
is  a  storm  of  much  more  confused  elements, 
higher  and  lower,  than  the  purely  physical.  ''Dyna- 
mical" and  "statical"  economics  would  come  un- 


FIGURES  CAN  PROVE  ANYTHING  87 

der  the  ban;  and  the  expression  "disturbing  ele- 
ments" in  political  economy  must  also  be  recog- 
nized as  no  more  than  a  metaphor.  Finally,  when 
it  is  said  that  even  the  favourite,  old  fashioned, 
harmless,  financial  phrase  ''fund"  has  been  con- 
verted into  a  physical  metaphor  by  being  brought 
into  a  new  contrast,  ''not  a  fund,  but  a  flow," 
it  may  occur  to  some  of  us  that  we  are  nearing  a 
reductio  ad  dbsurdum.  If  we  excluded  such  phrases 
we  should  have  hardly  any  language  left  to  us  to 
think  with. 

But  this  is  not  the  conclusion  of  the  whole  mat- 
ter. The  predominance  of  a  certain  class  of  meta- 
phors may  show  a  real  bias  of  thought,  whereas 
there  are  parts  of  the  economic  subject  where  a 
predominance  of  physical  or  even  mathematical 
metaphors  may  be  quite  suitable.  Few  of  us  would 
think  of  excluding  human  society  from  the  "law 
of  Probabilities"  on  the  field  of  Statistics. 

The  much-reviled  phrase  of  Malthus,  geometri- 
cal and  arithmetical  ratio,  was  not  so  much  in- 
applicable as  empirically  inexact.  He  was  deal- 
ing with  the  animal  side  of  human  nature,  which 
is  undoubtedly  a  real  part  of  it,  and  the  question 
of  the  tendency  to  increase  in  men  and  in  food  could 
be  considered  apart  by  biology  with  the  aid  of  the 
physical  sciences.  Quesnay  and  Adam  Smith 
had  both  drawn  similes  from  physiology.  Ques- 
nay was  a  doctor.  You  will  find  the  analogy  of 
the  human  body  to  the  body  economic  remarked  by 
Hegel  and  Herbert  Spencer.    It  was  a  very  old 


88  '  DISTURBING   ELEMENTS 

parallel — we  may  find  it  in  the  fable  of  the  belly 
and  the  members — and  seems  in  all  ages  to  have 
been  a  comfort  to  politicians  and  political  phil- 
osophers. ''You  want  to  know  how  this  scheme 
works?  Well,  it  works  in  the  same  way  as  the  act 
of  breathing  in  the  body  through  the  lungs"  and 
so  on.  Similes  from  the  doctor's  knowledge  of 
the  body  are  less  ambitious  than  metaphors  from 
Biology,  the  separate  study  of  all  animal  life. 
It  has  claims  on  us,  beyond  the  physical  sciences, 
for  man's  animal  properties  are  a  step  nearer  to 
his  distinctively  human  nature  than  his  material 
properties  or  chemical  composition.  There  is  all 
the  greater  risk  that  part  of  the  truth  may  be 
mistaken  for  the  whole  in  biological  metaphor, 
for  biology  is  nearer  the  whole  than  physical 
science. 

Both  the  biological  study  of  man,  followed  by 
Malthas  and  Darwin,  and  the  statistical  study  of 
him  based  on  the  Theory  of  Probabilities,  fail  to 
give  us  the  whole  man,  or  even  as  much  of  him  as 
we  need  in  Political  Economy.  The  man  of  statis- 
tics is  an  item  whose  humanity  does  not  matter 
for  the  purpose  of  the  statistical  inquiry;  we  might 
call  him  live  stock  without  affecting  the  results. 
But  the  witty  saying  is  no  more  than  a  sally: 
''Civilization  is  that  progress  which  can  be  verified 
by  statistics,  as  education  is  that  knowledge  which 
can  be  tested  by  examinations."  Statistical  study 
is  the  handmaid  of  all  social  sciences  but  not  itself 
identical  with  any  one  of  them.     It  deals  with 


FIGURES   CAN   PROVE   ANYTHING  89 

such  bodies  of  social  facts  as  are  expressible 
not  merely  in  nambers  but  in  large  numbers.  It 
investigates  the  truth  that  there  is  in  averages; 
though  its  perfection  of  method  is  of  very  recent 
date,  the  facts  on  which  it  is  founded  have  been 
observed  for  two  centuries.  Long  before  that 
time,  Aristotle  noticed  that  there  is  greater  wisdom 
in  a  large  assembly  than  in  the  separate  members  of 
it;  but  he  did  not  notice  that  there  is  a  greater  con- 
stancy or  uniformity  in  the  proceedings  of  large 
groups  than  of  small  or  of  individuals.  This  has 
been  well  illustrated  in  the  brilliant  book  by  Her- 
bert Spencer  on  The  Study  of  Sociology.  He 
shows  for  example,  that  statute  law  may  pro- 
duce no  predictable  effect  on  an  individual  but 
a  very  distinct  one  on  the  general  mass  of  men. 
This  is  true  too  of  such  economic  principles  as 
that  the  greater  gain  will  be  preferred  to  the  less. 
But  it  also  applies  to  cases  where  deliberate  will 
does  not  enter.  The  uniformity  of  a  death  rate 
and  even  a  rate  of  accident  has  been  long  observed. 
Mr.  Bowley  duly  notes  how  Biology  in  the  hands 
of  Karl  Pearson  and  others  has  been  verifying 
itself  by  statistics,  especially  in  regard  to  the  theory 
of  evolution  and  inheritance.  But  neither  Biology 
nor  Political  Economy  is  identical  with  Statistics; 
nor  are  the  first  two  identical  with  each  other. 
Biology  in  the  largest  sense  includes  all  that  per- 
tains to  the  scientific  study  of  living  things,  includ- 
ing physiology,  zoology,  morphology.  Since  ever 
the  two,  Biology  and  Political  Economy,  have  been 


90  DISTURBING   ELEMENTS 

recognized,  they  have  mutually  influenced  each 
other.  The  most  brilliant  instance  is  the  genesis 
of  the  Darwinian  theory  out  of  the  Malthusian; 
but  there  have  been  many  services  of  one  to  the 
other  in  less  broad  generalizations.  The  growth, 
structure,  and  functions  of  an  economic  body,  more 
especially  in  the  division  of  labour  there,  appear 
analogically  in  all  living  things.  Physiology  is 
said  by  Spencer  to  have  learned  the  idea  of  division 
of  labour  from  Economics  as  (according  to  the 
same  writer)  Biology  owes  the  idea  of  development 
to  Sociology.  In  dealing  with  things  economic 
and  things  biological  we  find  that  the  prop- 
erties of  the  units  determine  the  character  of  the 
groups ;  societies  of  men  have  characteristics  broadly 
depending  on  the  characteristics  of  the  individual 
members.  As  a  group  of  dogs  would  bear  distinc- 
tively canine  characteristics,  a  group  of  men  would 
bear  human.  They  would  show,  for  example,  a 
social  sympathy  and  power  to  act  together,  as 
well  as  general  cleverness  and  power  to  outwit 
other  animals.  A  group  of  Russians,  too,  or  Ameri- 
can-Indians, would  bear  Russian  or  American- 
Indian  characteristics,  evident  on  close  study. 
All  this  without  disparagement  of  the  principle 
that  uniformities  of  the  mass  are  calculable  while 
they  are  not  rules  in  detail  for  the  individual. 
This  only  means  that  the  root  of  the  uniformity  is 
in  each  individual  and  that  it  usually  grows 
but  not  invariably.  Usual  growth  is  enough  for 
a  generalization,  whether  biological  or  economic. 


FIGURES   CAN   PROVE   ANYTHING  91 

The  parallel  is  still  mainly  true  when  the  evolution 
from  the  simpler  to  the  more  complex  organiza- 
tion is  concerned.  The  greater  specialization  of 
the  more  developed  society  means  among  other 
things  economic  specialization;  it  means  more 
perfectly  developed  trading-organization,  func- 
tion and  structure  reacting  on  one  another. 

But  the  human  groups  differ  from  one  another 
so  much  more  than  groups  of  animals  from  groups 
of  like  animals,  that  the  lessons  we  draw  from 
groups  of  animals  soon  fail  us  when  we  deal  with 
man,  even  if  we  do  not  go  so  far  as  to  say  with 
Spencer  that  each  human  society  is  a  species  by 
itself.  Biology  has  so  far  influenced  us  that  we 
all  talk  of  the  State  as  an  Organism;  and  we  are 
tempted  to  consider  the  Struggle  for  Existence 
and  Survival  of  the  Fittest  as  the  unavoidable 
way  of  procuring  the  development  of  the  higher 
organization.  These  formulae  however  are  not 
the  last  word  of  science  on  the  development  of 
man.  If  they  were  so,  political  organization 
must  be  defeating  itself,  for  it  consciously  does 
much  in  our  time  to  put  in  place  of  the  struggle  for 
existence  the  aspiration  after  well-being  for  our- 
selves and  others.  We  do  not  seek  to  attain  a 
Super-Man,  but  we  do  not,  even  in  our  economic 
system,  take  stock  of  man  as  simply  animal  any 
more  than  as  simply  tool. 

If  there  was  a  Sociology  full  formed,  it  would 
help  us  much  more  to  express  ourselves  by 
Sociological   metaphors   than  by  Biological,  for 


92  DISTURBING   ELEMENTS 

Sociology  goes  beyond  Economics  whereas  Biology 
lags  behind  it.  But  Sociology  is  even  more  of  a 
mere  endeavour  after  science  than  Economics,  and 
in  any  case  human  language  uses  by  preference 
the  lower  to  express  the  higher,  rather  than  the 
converse. 

There  is  another  aspect  of  the  same  subject 
worth  regarding  in  this  contest.  Biology  takes 
a  given  life  as  determined  by  environment  and 
heredity.  Some  biologists  will  even  refuse  to 
allow  that  human  life  itself  is  ever  otherwise  deter- 
mined. In  physical  and  physiological  stuff  and 
capabilities  it  may  be  so;  the  environment  and  the 
germ-plasm  may  give  us  all  the  essence  of  a  man. 
If  this  is  the  whole  story  however,  then  the  his- 
torical economists  may  be  right  in  saying  that 
every  political  economy  is  a  political  economy  of 
a  certain  epoch,  entirely  relative  and  confined  to 
that  epoch,  environment  being  always  the  pre- 
dominant partner.  But,  if  we  yield  here,  we  are 
allowing  biological  metaphors  to  run  away  with 
our  logic.  Too  much  would  be  proved.  If  no 
knowledge  can  overcome  environment,  there 
could  be  no  science  extending  beyond  the  moment, 
and  therefore  no  real  science  at  all.  The  environ- 
ment may  be  taken  so  widely  as  to  include  the 
environed  intellect  that  surveys  it;  but  in  this 
case  the  word  has  been  strained  till  it  has  burst 
through  its  biological  meaning  altogether. 

The  drift  of  this  reasoning  is  that,  while  all  the 
sciences,  especially  those  touching  subjects  nearest 


FIGURES   CAN   PROVE   ANYTHING  93 

society,  may  be  used  in  illustration  of  economic 
reasoning  and  as  an  aid  to  the  understanding 
of  economic  principles,  we  mast  never  forget  that 
they  cannot  yield  us  more  than  metaphors.  There 
is  danger  lest  we  use  the  metaphor  for  the  principle 
itself.  It  is  not  long  ago  since  we  used  to  hear  of 
society  as  an  organism,  frankly  in  the  biological 
sense,  and  of  its  evolution  as  simply  biological,  a 
case  simply  of  the  evolution  of  animal  life,  man 
being  obviously  an  animal. 

There  is  more  reserve  now.  Organism  is  now 
seen  to  have  been  a  metaphor.  Perhaps  the  term 
organism  was  never  applied  to  a  group  at  all  except 
in  the  case  of  men,  though  the  metaphor  might 
have  suited  bees  and  ants  in  their  united  action. 
In  their  case  one  feature  appears  that  is  supposed 
to  justify  the  metaphor  in  the  human  instance; 
when  the  one  member  suffers,  the  others  suffer 
with  it.  This  is  true  too  of  the  mare  and  the  foal, 
the  cow  and  the  calf.  The  growth  of  this  close 
fellow-ship  and  fellow-feeling  is  due  in  those  cases, 
also,  not  to  a  deliberate  aim  or  will  of  the  members 
of  the  group  but  to  a  "natural  process"  not  willed 
by  them.  But  even  in  regard  to  bees  and  ants  the 
expression  would  be  of  little  help;  the  whole  body 
of  ants  or  bees  does  not  feel  in  its  members  as  an 
individual  ant  or  bee  in  its  limbs.  Nor  does  the 
human  society,  still  less  the  human  State.  The 
State  is  the  supreme  public  authority  with  the 
public  force  behind  it.  The  State  is  in  one  sense 
the  highest  organization  of  all;  but  it  has  less  of  the 


94  DISTURBING   ELEMENTS 

OTgamc  feeling  than  the  society,  of  which  it  is  the 
expression.  There  is  a  State  where  there  is  a  com- 
mon government,  though  a  community  is  not  a 
State,  nor  a  government  a  State;  it  is  the  unity 
of  a  nation  expressed  in  a  government.  There  is 
Httle  help  to  us  from  caUing  the  State  an  organism 
in  the  biological  sense,  since  a  nation  is  not  an  ani- 
mal or  definable  in  terms  of  zoology;  and  it  is  delib- 
erate and  not  instinctive  in  committing  power  to 
its  government.  Society  has  more  of  the  instinc- 
tive element;  it  is  not  made  but  grows;  but  just 
for  that  reason,  in  its  most  instinctive  condition, 
it  is  called  unorganized.  The  separate  wills  and 
intellects  of  human  beings,  however  frozen  by 
custom,  are  enough  to  forbid  analogy  with  limbs 
absorbed  in  a  body.  If  it  be  answered  that  there 
are  living  creatures  with  limbs  that  can  be  de- 
tached and  made  to  form  separate  bodies,  it  will 
surely  be  allowed  that  those  are  the  last  creatures 
likely  to  serve  as  a  good  illustration  of  the  close 
union  of  society.  The  peculiarity  is  that  the  close 
union  and  detachment  are  consistent  in  the  human 
beings:  they  exist  at  one  and  the  same  time. 
They  are  consistent  because  the  bond  is  a  spirit- 
ual bond;  it  is  a  bond  of  intellect  and  sympathy. 
If  ants  and  bees  have  this  too,  we  need  not  be 
offended.  All  we  can  say  then  is  that  in  their  case 
too  there  is  no  special  help  given  by  the  compari- 
son of  the  union  of  them  in  their  groups  with  the 
union  of  the  limbs  with  the  body;  in  the  one  case 
he  members  are  discrete,  in  the  other  continuous. 


FIGURES  CAN  PROVE  ANYTHING  95 

It  is  true  on  the  contrary  that  organism  is  an 
expression  that  need  not  be  confined  to  biology; 
and  in  using  '^ organism"  and  ''organic"  we  are 
not  necessarily  relying  on  a  supposed  analogy  of 
the  kind  just  rejected.  Philosophers  have  been 
inclined  to  say  that  society  gives  a  new  meaning 
to  those  words.  An  organon  is  an  instrument,  a 
means  to  an  end ;  and  in  human  society,  the  nearer 
it  is  to  perfection,  the  whole  and  the  parts,  the 
body  and  the  members  are  the  more  truly  means 
and  end  to  each  other.  The  union  thus  formed  is 
a  higher  type  of  organic  union  than  the  biological. 
As  the  economist  has  to  deal  with  human  socie- 
ties (were  they  only  of  ''economic  men"  and  there- 
fore to  some  of  our  friends  hardly  human)  he  will 
do  well  to  follow  the  philosophers,  and  when  he 
speaks  of  the  social  organism  think  of  something 
of  considerably  higher  type  than  even  the  human 
body. 

Has  Philosophy  itself  any  other  help  to  give  us 
in  Economics,  and  may  it  also  prove  occasionally 
a  "disturbing  element?" 

We  have  already  seen  that  mistaken  ideas  of  a 
social  philosophy  (on  natural  right,  more  especially) 
have  had  their  influence.  A  mature  social  philos- 
phy  could  hardly  fail  to  help  us,  but  at  present  as 
was  said  Political  Economy  is  the  more  mature  of 
the  two.  There  are  two  departments  of  philoso- 
phy, viz.,  Psychology  and  Ethics,  in  which  in  our 
own  time  economists  have  trespassed  with  peculiar 
alacrity;  and  we  may  also  say  there  has  been  intru- 


96  DISTURBING   ELEMENTS 

sion  of  these  two  in  particular  into  Political  Econo- 
my. The  intrusion  is  hard  to  prevent.  Some  econ- 
omists  have  climbed  over  (or  down)  into  their 
Economics  from  their  Moral  Philosophy,  and  now- 
a-days  every  economist  seems  to  find  it  necessary 
to  begin  with  a  discussion  of  Subjective  Value, 
(''Value  in  use."),  which  is  very  near  Psychology. 
To  take  Ethics  first,  it  may  be  quite  harmless 
to  introduce  ethical  principles  so  long  as  we  our 
selves  know  what  we  are  doing  and  give  fair 
w^arning  to  others.     Otherwise  we  may  give  the 
impression   that  our   economic  argument  is  not 
strong  enough  to  stand  alone.    When  Adam  Smith 
declared  certain  kinds  of  interference  {e.g.,  laws  of 
apprenticeship,  of  settlement,  and  even  of  the  fis- 
cally Protective  sort)  to  be  violations  of  justice  and 
of  the  rights  of  men  to  unfettered  disposal  of  them- 
selves and  the  fruits  of  their  labor,  he  was  import- 
ing ethics,   and  it  might  quite    well  have  been 
answered  that  the  question  of  economy  ought  to  be 
considered  by  itself.    Possibly  every  injustice  is 
bad  economy  for  a  nation;  it  is  so  for  the  common- 
wealth of  nations;  it  may  or  may  not  be  for  small 
groups  or  for  individuals.    Slavery  is  now  regarded 
as  a  kind  of  robbery  and  is,  economically  speaking, 
out  of  court.     It  was  not  always  so  regarded, 
and  the  economic  truth  about  it  was  not  only  worth 
stating  but  is  really  a  powerful  force  against  it  in 
the  minds  of  statesmen.    Adam  Smith  must  have 
felt  that  PoUtical  Economy  had  no  meaning  for 
slaves,  since  these  were  allowed  little  or  no  scope 


FIGURES   CAN   PROVE   ANYTHING  97 

for  the  '^  constant  and  uninterrupted  desire  to 
better  their  own  condition,"  but  that  did  not 
prevent  him  from  showing  the  economic  defects  of 
slavery  as  an  institution.  Something  similar  is 
done  by  economists  now  in  the  case  of  "Sweating." 
The  appeal,  also  to  the  economy  of  the  Nation  as 
against  that  of  smaller  groups  or  individuals  is  a 
sound  economic  appeal,  and  imports  no  ethics  into 
the  matter.  Economy  m  men  is  not  so  much  one 
of  many  considerations,  in  the  economic  argument 
pushed  in  this  direction,  as  one  of  the  fundamental 
assumptions  on  which  political  economy  is  founded, 
and  quite  paramount.  A  society  which  did  not 
economize  its  men  would  be  self-destructive;  it 
would  be  a  group  that  did  not  preserve  its  own 
units.  This  claim  of  preeminence  for  human  life 
is  no  doubt  a  point  of  contact  with  Ethics;  but 
the  claim  of  Economics  is  not  that  the  human  life 
in  question  be  of  any  specific  moral  quality;  it  is 
simply  that  the  men  be  there,  and  that  those  who 
are  there  shall  be  really  men,  agreeing  widely  and 
differing  infinitely. 

It  is  the  wide  agreement  and  infinite  difference 
that  have  led  to  the  existence  of  exchanges  and 
values  and  other  economic  phenomena.  Here  it  is 
that  we  are  most  liable  to  the  intrusion  of  Psychol- 
ogy. Hedonism  or  Utilitarianism,  a  theory  of 
Ethics  resting  on  a  Psychological  analysis  of  feehng, 
desire  and  will,  have  often  been  made  the  founda- 
tion of  Economics.  Bentham's  Utilitarianism 
appears  in  Ricardian  economics,  and  Jevons  em- 


98  DISTURBING   ELEMENTS 

ployed  Utilitarian  psychology  in  his  theory  of 
consumption.  Utilitarianism,  thus  entering,  pre- 
judiced large  bodies  of  thoughtful  men  against 
economics  without  really  helping  economics  itself. 
We  must  face  prejudice  if  we  have  the  truth  on 
our  side;  but,  if  it  is  not,  even  to  ourselves,  certainly 
truth  but  only  a  useful  assumption,  our  proceeding 
is  not  heroic  but  Quixotic.  Now  Don  Quixote  was 
not  in  his  perfect  mind. 

The  attempt  of  modern  economists  to  make  the 
Consumption  of  wealth  their  starting  point  re- 
quires that  they  shall  either  use  the  most  general 
language  about  human  wants  and  feelings  and 
motives,  in  order  to  suit  any  and  every  psychol- 
ogy, or  else  that  they  shall  have  a  psychology  of 
their  own  and  face  the  usual  philosophical  diffi- 
culties. To  most  economists  it  will  be  enough  to 
assume  that  men  have  wants  and  that  they  deliber- 
ately satisfy  them  by  labour  applied  directly  or 
indirectly  to  external  goods.  There  is  a  reckoning 
also  of  comfort  sacrificed  against  comfort  gained, 
and  there  is  a  mental  process  carrying  us  toward 
the  decision  whether  this  or  that  sacrifice  is  ''worth 
while"  or  not.  All  such  matters  have  a  psycholo- 
gical aspect.  But  whether  pleasure  and  pain  be 
our  absolute  masters  or  not  may  be  left  an 
unsettled  question  by  the  economist  if  he  chooses 
so  to  leave  it.  The  psychology  of  wants  and  of 
toil  goes  farther  than  the  economic  treatment  of 
them.  Enough  ground  is  cleared  without  it  for 
the  making  of  a  theory  of  Subjective  Value. 


FIGURES   CAN   PROVE   ANYTHING  99 

Some  of  our  friends  doubt  if  it  is  worth  while 
to  elaborate  such  a  theory  as  this  last  at  all,  in  view 
of  the  fact  that  our  study  is  of  social  not  of  domes- 
tic or  personal  economy.  But  to  know  the  group 
we  must  know  the  common  and  dominant  charac- 
teristics of  the  units  that  form  the  group,  and  the 
idea  of  subjective  value  seems  to  be  one  of  these 
characteristics.  Even  Adam  Smith,  dealing  with 
the  Wealth  of  Nations,  starts  really  from  the  units : 
"the  constant  desire  of  every  man  to  better  his 
own  condition."  And  it  throws  light  on  exchange, 
to  recognize  how  the  infinite  differences  and  pre- 
ferences of  individuals  enable  both  exchangers  to 
gain  because  the  final  utilities  differ  for  them  of 
goods  materially  the  same. 

There  might  be  more  doubt  as  to  the  degree  of 
importance  of  this  branch  of  economics  relatively 
to  others.  There  is  a  fitness  perhaps  in  putting 
the  theory  of  Consumption  first  in  our  text  books 
because  consumption  on  the  whole  is  first  in  nature ; 
the  intention  to  consume  is  certainly  first.  But 
in  our  teaching  it  might  come  later  as  it  has  done 
(significantly)  in  the  history  of  economics.  When 
the  student  plunges  into  that  wood,  he  seems  often 
to  find  difficulty  in  emerging  from  it,  so  tempting 
are  the  psychological  problems  that  strew  his 
path  there.  It  is  perhaps  well  to  place  him  there 
late  and  then  let  him  stay  as  long  or  short  as  he 
chooses. 

We  need  not  as  economists  find  more  than  a 
proximate   beginning,    any   more   than   physical 


100  DISTURBING   ELEMENTS 

science  needs  to  go  back  to  metaphysics,  or  to  the 
first  creation  of  the  material  world;  and  even  in 
physics  the  light  now  dawning  on  scientific  men  in 
regard  to  the  origins  of  things  is  hardly  of  the  sort 
to  give  much  illumination  to  neophytes.  It  is 
better  sometimes,  in  teaching,  to  take  up  present 
problems,  than  'naked  in  the  air  of  heaven  ride.' 
The  philosopher  may  be  denied  assumptions ;  it  is 
his  function  to  go  behind  them ;  but  the  economist 
must  allow  himself  nearly  as  many  as  ordinary 
folk,  in  regard  to  first  beginnings. 

When  we  cross  over  from  Subjective  Value 
into  Objective  or  rather  that  kind  of  it  which 
concerns  the  economist  during  the  largest  part  of 
his  time,  namely,  Value  in  Exchange,  the  disturbing 
element  is  not  philosophy  but  Law.  Exchange  is  of 
possessions.  Exchange  is  of  property.  Exchange  is 
matter  of  contract.  Property  is  not  strictly  speak- 
ing an  economic  category,  neither  is  contract ;  but 
the  legal  categories  are  always  with  us,  and  there 
is  a  tendency  in  some  economic  writings  to  slip  into 
an  economic  conclusion  from  legal  premises.  What- 
ever has  its  price  is  supposed  to  have  an  economic 
standing,  and  sometimes  it  is  suggested  that  noth- 
ing else  has  it.  H.  D.  Macleod  is  perhaps  the  great- 
est offender  in  this  direction.  A  man  does  not 
always  know  his  own  bias.  Macleod  thinks  his  bias 
is  towards  physics  and  he  begins  by  saying  that 
economics  is  a  physical  science;  but  he  is  guided 
by  law  throughout,  and  includes  rights  of  action 
to  goods  and  services  as  distinguished  from  the 


FIGURES   CAN   PROVE   ANYTHING  101 

goods  and  services  themselves  under  ''wealth." 
Credit  to  him  is  capital.  There  is  much  more 
to  the  same  purpose.  Most  of  us  would  admit 
that  Macleod  goes  too  far;  but  some  would  say 
that  his  direction  was  not  a  wrong  direction.  The 
other  ''disturbing  elements,"  they  would  say,  are 
on  a  different  plane  from  Law.  They  were  theories, 
but  law  is  among  the  facts,  the  hard  facts,  of  life, 
no  doubt  partly  shaped  by  the  rest  but  also  shaping 
them. 

This  is  so.  As  we  saw  at  first,  law  is  usually 
a  defined  and  rationalized  custom  and  that  is  a 
fact  of  life,  industrial  life  included.  But  so  are 
religion,  morals,  and  politics.  Such  facts  help  to 
make  up  the  concrete  world  into  which  our  ab- 
stract theories  must  be  fitted.  But  they  are  not  to 
make  our  theories  or  (if  we  can  avoid  it)  help  to 
make  them,  any  more  tnan  theories  from  other 
studies  (if  we  may  distinguish  thern  from  the  facts 
of  life)  are  to  be  allowed  to  intrude.  Call  law 
fact  or  theory,  it  is  separable  from  pure  economics. 

The  materialistic  view  of  history  represented 
law  as  the  result  or  creature  of  industrial  condi- 
tions. Professor  Stammler  went  so  far  in  the  con- 
tary  way  as  to  say  that  social  economy  implied  and 
depended  on  Law.  In  modern  times  and  for  full 
maturity  this  is  nearer  the  truth;  but,  though  not 
separated  in  the  concrete,  economics  and  law  are 
separable  in  the  abstract,  and  perhaps  desirably 
separated  for  unprejudiced  economic  theory.  Prof. 
Stammler  himself  would  be  the  last  to  approve  any 


102  DISTURBING   ELEMENTS 

confusion  of  economic  principles  with  statute  laws ; 
and  yet  such  confusion  will  arise  if  we  do  not  some- 
what sharply  distinguish  law  and  economics. 

The  relation  of  economics  to  Jurisprudence  or 
the  science  of  the  first  principles  of  lawmaking  is 
of  course  even  less  close  than  the  relation  of  econo- 
mics or  even  the  industrial  system  to  the  actual 
laws  of  a  given  nation.  It  is  no  nearer  us,  to  say 
the  least  of  it,  than  moral  philosophy. 

We  cannot  ride  over  all  the  objections  to  the 
disturbing  elements  by  saying:  "Why!  what 
you  call  disturbing  elements  are  simply  the  other 
elements  of  the  concrete  life  which  you  left  out  in 
your  abstraction!" — Bacon  has,  grandiosely  or 
majestically,  described  the  idola  theatri,  figures  of 
the  stage,  or  theories  of  speculators,  as  disturbing 
science  in  a  different  way  from  the  idola  fori, 
figures  of  the  market  place,  or  ambiguities  of 
human  speech,  and  the  idola  specus,  figures  of 
the  cave,  the  personal  bias  and  pecuharities  of  the 
individual  man,  and  idola  tribus,  the  limitations  of 
man's  senses  common  to  all  humanity.  All 
such  figures  affect  us.  The  personal  bias  is  perhaps 
worst  of  all, but  our  critics  seldom  fail  to  discover 
it  for  us,  sooner  or  later.  All  the  idola  affect  us. 
But  the  idola  theatri  are  not  so  nearly  a  part  of 
human  life  as  the  rest.  When  our  economic  ab- 
stractions are  put  back  into  the  concrete  world 
they  are  to  fit  into  human  life,  but  not  necessarily 
into  human  theories.  At  least  it  is  probably  not 
within  the  power  of  ordinary  economists  so  to  test 


FIGURES   CAN   PROVE   ANYTHING  103 

an  encyclopaedia  of  theories.  Human  life  is  not  our 
rival,  but  the  theories  may  possibly  be  so.  They 
are  attempts  like  our  own  to  explain  human  life 
in  part  or  in  whole.  The  old  question  recurs  if 
abstraction  is  desirable.  First  is  it  desirable  to 
make  preliminary  and  temporary  abstraction  from 
the  concrete  industrial  state  of  man  which  con- 
tains so  much  more  than  is  industrial;  second  is  it 
desirable  to  abstract  altogether  from  the  world's 
theories  even  when  you  are  coming  down  into  the 
world  again  from  the  height  of  your  first  economic 
abstraction?  Perhaps  not  altogether.  Theories 
cannot  be  quite  disregarded;  but  they  are  objects 
of  criticism  (Utopian  Commonwealths  among 
them)  rather  than  aids  to  reflection. 

If  we  have  been  bred  on  German  Philosophy 
we  may  have  a  "philosophic  faith"  that  there  is 
a  logic  not  only  in  human  history  generally  but 
even  in  the  succession  of  human  theories,  and  they 
are  not  misleading  idula  theatri  unless  we  take  them 
out  of  their  context.  All  that  need  be  said  is  that 
their  context,  unless  they  are  economic  theories, 
is  not  ours.  If  they  are  economic  theories  and 
their  context  therefore  is  ours,  it  is  not  for  sane 
men  to  suppose  that  such  theories  survive  the  time 
of  their  own  superseding,  and  continue  to  reckon 
among  the  facts  of  life.  On  the  other  hand, 
verum  index  sui  et  falsi;  the  true  theory  read  with 
full  intelligence  will  be  found  to  include  what  was 
true  in  predecessors  and   contemporaries   alike. 


Lecture  V 
"IN  THE  LONG  RUN" 

Certain  disturbing  elements  or  alien  influences 
have  in  time  past  prevented  economic  reasoning 
from  being  quite  pure.  Not  even  the  youngest 
of  us  escapes  them  entirely.  What  must  not  be 
taken  for  granted  lies  along-side  of  what  must 
be  taken  for  granted.  For  example  we  must  not 
take  for  granted  that  the  economic  man  has  every 
intellectual  and  moral  virtue,  but  we  must  take 
for  granted  that  he  is  a  social  being  with  common 
honesty,  a  normal  man.  We  must  study  his  com- 
mercial ambition  and  the  general  tendencies 
resulting  from  it,  separately,  not  allowing  other 
kinds  of  study  to  thrust  their  methods  and  their 
metaphors  upon  us.  When  we  have  thus  formed 
our  principles  without  prejudice,  we  must  come 
down  into  the  world  of  experience  again  and  test 
for  ourselves  how  far  they  are  at  work  there. 

It  is  always  with  us  a  question  of  tendencies. 
Economic  tendencies  are,  we  believe,  more  uni- 
form than  any  others;  and  we  may  expect  to  see 
them  persistent,  not  only  simpliciier  in  theory  with 
all  obstacles  thought  cleared  away  but  in  the  com- 
plexity of  human  society.    In  the  modern  industrial 


IN   THE   LONG   RUN  105 

world  the  primacj'  seems  accorded  to  them  by 
society  itself,  for  almost  the  first  time  in  history. 
Yet  we  do  not  as  a  matter  of  fact  find  absolute 
domination.  Commercial  ambition  may  be  the 
predominant  partner,  bit  there  are  many  part- 
ners. The  few  elementary  general  principles,  of 
currency,  of  division  of  labour,  may  rale  unques- 
tioned in  progressive  nations.  There  is  doubt  if 
they  can  be  said  to  do  so  in  the  unprogressive, 
though  Marshall  has  made  an  ingenious  attempt 
to  prove  it  true  of  them.  Prices  and  wages  do  not, 
in  the  East,  bound  up  witn  alacrity  in  response 
to  the  fall  in  silver;  they  have  tended  upwards 
elsewhere  even  in  response  to  the  fall  in  gold,  a 
harder  matter  to  prove. 

But  in  the  industrial  commonwealth  of  the 
great  modern  trading  nations  the  primacy  is  largely 
confessed.  For  example,  the  economic  phenomena 
which  economists  have  pointed  out  as  necessarily 
occurring  in  countries  extracting  the  precious 
metals  have  duly  occurred  there,  perhaps  without 
any  exception.  They  are  uniformities  that  affect 
all  equally. 

It  is  harder  to  show  the  working  of  tendencies 
where  the  whole  society  is  not  affected  but  only  cer- 
tain groups.  It  is  not  easy  to  show  that  the  inven- 
tion of  new  machines  will  tend  to  increase  wages. 
This  was  the  tendency  first  supposed  by  Ricardo; 
but  he  changed  his  mind  and  wrote:  "The  same 
cause  which  may  increase  the  net  revenue  of  the 
country  may  at  the  same  time  render  the  popula- 


106  DISTURBING   ELEMENTS 

tion  redundant  and  deteriorate  the  condition  of  the 
labourer."  It  was  this  change  of  view  that  made 
MacCulloch  doubt  the  infalhbility  of  Ricardo.  The 
more  orthodox  position  (if  w^e  allow  that  any  posi- 
tion of  Ricardo's  could  be  heretical)  was  that 
machinery  tends  in  the  long  run  to  employ  more 
labour  than  it  has  displaced;  this  was  to  be  the 
consolation  of  the  hand-loom  weaver,  thrown  out 
of  work  by  the  factory  system.  It  was  to  be 
a  sufficient  vindication  of  an  economic  principle, 
that,  if  it  did  not  fit  the  facts  now,  it  would  fit 
them  at  some  time  in  the  future.  But  in  the 
case  of  machinery  there  were  more  economic 
principles  asserted  than  one.  One  seems  quite  to  fit 
the  facts :  that  there  is  a  tendency  under  the  regime 
of  machinery  towards  a  greatly  increased  produc- 
tion at  less  cost.  It  was  a  different  proposition 
that  the  increased  product  tends  to  be  equally 
shared.  The  economist  has  no  warrant  for  say- 
ing that  any  economic  tendenc}^  exists  which  by 
itself  brings  about  good  distribution.  The  sharing 
of  property  was  matter  of  law  and  political  insti- 
tutions, in  some  countries  religious  prejudices; 
and  the  conditions  so  established  might  prevent 
any  such  consummation.  It  does  not  seem  true 
that  economic  tendencies  are  all  made  beneficial 
by  length  of  time  any  more  than  a  man  is  neces- 
sarily made  better  by  growing  old.  There  is  no 
saving  virtue  in  the  ''long  run." 

But  there  is  also  no  necessary  fallacy  in  the 
phrase.    The  element  of  time  enters  into  economic 


IN  THE   LONG  RUN  107 

tendencies  unavoidably  and  by  the  very  notion  of 
"  tendency"  itself .  Tendency  is  a  process,  not  a 
point  or  a  fait  accompli.  If  we  may  use  a  meta- 
phor, it  is  a  force  not  a  quantity. 

Take  another  example  of  it.  The  tendency  of 
profits  to  a  minimum  has  often  a  positive  forecast 
of  the  future  based  on  it;  it  is  read  as  a  prediction. 
But  there  is  a  rival  economic  tendency  alongside, 
namely  the  postponement  of  such  an  evil  day 
(if  it  be  one)  by  invention.  The  economic  man  is 
not  always  aninventive ;  as  an  average  man,  he 
occasionally  invents;  and  his  occasional  inven- 
tions, whether  they  be  of  new  implements  or  of 
new  economies  in  the  use  of  the  old  implements, 
arrest  the  downward  movement,  or  tend  to  do  so. 
Where  there  are  two  economic  tendencies  involved, 
we  must  not  base  a  prediction  on  only  one  of  them. 

Is  tune  itself  then  a  disturbing  element?  It  is 
the  common  element  in  which  all  experience  moves ; 
it  is  not  disturbing  unless  we  think  with  Schopen- 
hauer that  life  itself  is  so.  We  are  here  to  make  the 
best  of  both  of  them,  and  to  understand  them  so 
far  as  we  can.  Now,  time  plays  a  part  in  the  sim- 
plest economic  act.  The  very  idea  of  economy 
involves  it;  it  looks  before  and  after.  In  what 
we  call  a  "hand  to  mouth  existence"  there  is 
no  true  economy.  Adaptation  of  means  to  ends, 
of  tools  to  production,  involves  the  interval 
(however  short)  between  now  and  then.  Still 
more  clearly  is  time  involved  in  such  production 
as  involves  employment   of   wages-earners,  and 


108  DISTURBING   ELEMENTS 

advances  to  them,  even  if  the  product  is  meant  as 
soon  as  possible  to  repay  the  advances.  It  is 
involved  in  the  later  form  of  the  distinction 
between  fixed  and  circulating  capital,  between 
what  wears  out  sooner  and  what  wears  out  later. 
The  distinction  so  well  brought  out  by  some  of 
our  friends  between  present  and  future  goods,  as 
the  basis  of  an  economic  theory  of  interest,  comes 
in  here.  The  distinction  too  between  long  and 
short  periods  of  production,  emphasized  by  others, 
is  not  only  a  distinction  of  time,  but  one  peculiarly 
relevant  to  the  question  of  the  efficacy  of  the 
"long  run."  Marshall's  exposition  of  the  long 
period's  supply  price  and  the  short  period's  sup- 
ply price  is  classical.  Here  is  a  quotation  from 
it  bearing  on  the  matter  in  hand:  "When  it  is 
said  that  though  the  price  of  wool  on  a  certain 
day  was  abnormally  high,  though  the  average 
price  for  the  year  was  abnormally  low,  that  the 
wages  of  coalminers  were  abnormally  high  in 
1872  and  abnormally  low  in  1879,  that  the  real 
wages  of  labour  were  abnormally  high  at  the  end 
of  the  14th  century,  and  abnormally  low  in  the 
middle  of  the  16th,  every  one  understands  that 
the  scope  of  the  term  normal  is  not  the  same  in  these 
various  cases."  Marshall  uses  "normal"  where 
Adam  Smith  uses  "natural"  (as  in  'natural  price' 
and  wages).  It  describes  the  result  of  economic 
tendencies  working  unimpeded.  In  the  passage 
quoted,  it  has  three  meanings  according  to  the 
three  periods  chosen;  but  Marshall  contents  him- 


IN   THE   LONG   RUN  109 

self  with  a  broad  distinction  of  two  classes,  the 
first  in  which  there  is  time  for  supply  to  adapt 
itself  to  the  demand  and  the  second  where  there 
is  not  time. 

The  important  point  for  us  at  this  stage  is  that, 
though  Marshall's  cardinal  doctrine  is  that  mutual 
determination  is  nearer  economic  truth  than  a 
succession  of  causes  in  time,  he  here  conveys  that 
economic  processes  have  a  different  character 
according  as  they  are  long  or  short,  slow  moving 
or  quick.  Some  would  tell  us  that  all  distinctions 
of  time  are  relative;  sub  specie  cEternitatis  a  long 
period  and  a  short  one  are  alike  short,  a  thousand 
years  as  one  day,  and  vice  versa.  But  the  econo- 
mist is  not  a  metaphysician;  he  works  sub  specie 
hujus  sceculi.  The  distinction  of  times  long  and 
short  is  not  futile.  We  may  measure,  as  Marshall 
does  in  the  case  quoted,  by  the  length  of  the  ordi- 
nary processes  of  production;  and,  if  you  ask  what 
latitude  we  are  to  have  in  reckoning  ordinary 
processes,  it  may  be  answered  that  we  measure  by 
the  days,  years,  and  generations  of  working  hum.an 
life.  Provisionally,  we  may  say  that  there  is  a 
presumption  against  that  economy  of  which  the 
results  are  deferred  beyond  the  measure  of  a  gen- 
eration. There  may  be  a  doubt  of  it  before  that. 
When  it  is  said  of  any  transaction  that  ''time  is  of 
the  essence  of  the  bargain"  we  know  that  the  hmits 
are  narrow.  There  is  nothing  which  it  is  worse  to 
waste  than  time.  Yet  you  do  not  necessarily 
waste  it  by  spending  much  of  it;  and,  whatever 


110  DISTURBING  ELEMENTS 

was  done  in  the  days  of  the  making  of  the  pyra- 
mids, much  of  the  characteristic  work  of  modern 
industry  is  done  over  long  periods.  Transconti- 
nental railways  and  Panama  Canals  and  Nile 
Barrages  cannot  be  made  in  short  periods;  they 
may  take  what  is  a  great  fraction  of  an  ordinary 
man's  working  life,  perhaps  even  a  generation. 
Equally  characteristic  of  modern  industry  is 
the  continuous  process  of  production  and  reproduc- 
tion. Day  by  day  the  supplies  for  large  cities  are 
pouring  into  them;  and,  if  the  fresh  production 
of  wealth  or  fresh  transference  of  it  ceased  for  a 
week,  we  should  find  out  how  much  we  depend 
for  our  comfort  or  even  our  life  on  this  continuity. 
This  is  what  is  reasonably  meant  by  national 
income  being  not  a  fund  but  a  flow ;  and  it  implies 
an  economy  of  time  within  periods  of  production 
which  we  try  to  make  as  short  as  possible.  The 
modern  economic  system  economizes  time  at 
both  ends,  and  it  uses  the  long  period  for  the 
sake  of  the  short.  Production  is  carried  out  in 
the  long  period  in  order  to  enable  the  production 
in  the  continuous  short  periods  to  be  done  more 
fruitfully.  Once  finished,  the  railway  and  canal 
and  barrage  secure  that  for  us.  The  commercial 
ambition  and  private  interest  of  individuals 
tend  to  make  them  prefer  the  short  periods. 
Shortening  of  time  is  certainly  of  the  essence  of  the 
bargain  where  wages  are  concerned,  and  where 
livelihood  rather  than  affluence  depends  on  the 
venture.     Livelihood  always  does  depend  so  much 


IN   THE   LONG  RUN  111 

on  all  industrial  ventures  that  wherever  the  period 
can  be  shortened  it  is  economy  of  human  life  to 
shorten  it;  and  a  heavy  responsibility  rests  on 
statesmen  who  lengthen  it  where  the  obstacle  is 
only  poUtical,  as  in  the  case  of  the  old  English 
Corn  Laws.  Where  material  obstacles  stand  in 
the  way  of  a  beneficial  change,  needing  a  calculable 
irreducible  time  for  removal,  it  is  economy  in  the 
long  run  to  undertake  the  removal.  The  cost  can 
be  counted  and  the  return  anticipated  with  greater 
certainty  than  where  the  obstacles  are  human  wills. 
The  experiment  of  encouraging  Infant  Industries 
might  have  been  safer  if  the  presumption  had  been 
adopted  that  a  generation  is  an  amply  long  enough 
period  to  test  the  vitality  of  an  industry  and  amply 
long  enough  for  tne  great  body  of  the  people  to 
be  taxed  for  the  benefit  of  a  few.  The  only  long 
periods  that  are  really  economical  are  those  that 
are  necessarily  long.  It  is  true  economy  to  make 
your  periods  as  short  as  possible,  and  only  to  make 
them  long  where  you  cannot  make  them  short. 

Some  one  may  say  that  the  distinction  in  time  of 
long  and  short  periods  is  analogous  to  the  distinc- 
tion in  space  and  extent  of  great  and  small  pro- 
duction and  even  of  large  and  small  communities. 
Neither  of  these  is  a  futile  distinction  any  more 
than  the  distinction  in  time.  The  measure  of  a 
large  and  a  small  business  is  a  man's  abihty  to 
overtake  the  whole  management  of  it  with  or 
without  assistance;  it  is  the  extent  of  his  single 
powers,  as  the  distinction  in  time  related  to  the 


112  DISTURBING   ELEMENTS 

prolongation  of  these  powers  in  an  ordinary  life- 
time. The  measure  of  a  large  or  a  small  community 
is  even  more  definite.  A  community  is  too  small 
to  be  reckoned  "large"  if  its  numbers  are  too  small 
to  yield  trustworthy  statistical  results.  Results 
in  Holland,  New  Zealand  or  Switzerland  are  less 
valuable  than  in  larger  countries.  The  analogy 
may  be  especially  pressed  from  the  instance  of 
communities;  and  it  may  be  urged  that  an  econo- 
mic principle  (like  a  statistical)  must  be  tested 
over  an  adequate  number  of  cases,  and  this  may 
involve  a  time  that  is  long,  relatively  to  human 
life.  In  this  amount  of  "long  run"  it  may  justify 
itself.  It  may  prove  itself  to  be  a  real  economy, 
alike  of  men  and  of  resources,  as  in  the  case  of 
machinery,  of  which  Ricardo  lamented  the  pres- 
ent unhappy  consequences. 

It  does  not  seem  clear  how  Ricardo  proposed  to 
deal  with  the  distress  he  deplored.  Perhaps  "as 
a  gentleman"  he  went  on,  for  his  own  part,  paying 
the  same  wages  as  before;  but  he  does  not  appeal 
to  others  to  do  the  same.  He  does  not  propose  to 
join  with  the  Luddites  in  suppressing  machines. 
It  is  of  course  not  always  impossible  to  arrest  an 
economy.  Religious  persecution  has  been  success- 
ful where  it  has  been  sufficiently  thorough ;  and 
economic  changes  have  been  hindered  with  very 
fair  success  by  nearly  every  known  government 
in  the  world.  The  drawback  is  that  the  hindering 
of  them  injures  a  larger  number  than  it  helps, 
not  only  "in  the  long  run"  but  in  the  present.    On 


IN   THE   LONG   RUN  113 

the  other  side  it  is  a  fact  that  in  the  present  the 
sufferings  of  the  few  may  be  more  acute  than  the 
increased  comforts  of  the  many.  No  economic 
ingenuity  will  prove  that  the  invention  of  machines 
has  not  often  permanently  injured  individuals, 
in  property  and  even  in  life  itself. 

The  proper  consolation  seems  to  be  that  such 
inventions  are  a  greater  economy  for  the  w^hole 
community  than  for  any  individuals  who  gain  by 
them.  The  gains  of  private  people  bulked  more 
largely  in  Ricardo's  time.  These  private  gains 
seemed  the  chief  item  to  be  set  against  the  losses 
of  the  poor  weavers.  But  it  was  not  so.  What 
Adam  Smith  calls  the  interest  of  the  consumer 
meant  really  the  interest  of  the  community;  and 
here  we  are  introducing  a  consideration  w^hich 
takes  us  beyond  the  narrower  limit  of  time,  the 
single  human  life. 

Time  may  be  measured  in  at  least  four  different 
ways  in  the  economy  of  human  beings: 

1.  For  the  individual,  by  his  own  expectation 
(or  expectations)  of  life  and  the  return  to  his  out- 
lay within  it. 

2.  For  the  household,  by  the  householder's 
grasp  of  the  situation  on  its  behalf  and  the  degree 
of  his  unselfish  love  of  his  offspring  or  remoter  kith 
and  kin;  it  may  mean  a  far  range  of  provision. 

3.  For  associations  of  men,  by  the  interest  of 
all  jointly  and  severally,  not  only  severally  and  not 
only  jointly,  but  wutn  a  range  wider  than  the 
individual  life  or  single  households.    Where  the 


114  DISTURBING   ELEMENTS 

associations  are  not  purely  commercial,  they  ap- 
proach in  range  the  public  bodies. 

4.  For  public  bodies,  by  an  indefinite  period, 
depending  on  the  expectation  of  the  life  of  the  com- 
munity. This  last  has  a  large  economic  element. 
Among  the  concerns  described  even  by  orthodox 
economists  as  everybody's  business  and  nobody's 
business,  and  for  that  reason  as  public  business, 
there  are  many  economic  concerns,  say,  currency, 
taxation,  great  enterprises  requiring  more  capital 
than  even  associations  can  provide,  economy  of 
men,  involving  their  education  and  provision  for 
the  general  health,  as  well  as  economy  of  forests 
and  other  national  resources. 

The  classical  economists  were  too  near  the  idea 
of  the  State  as  a  "Police  Office"  to  take  full  account 
of  this  view;  and  it  is  this  view  of  the  national 
economy  that  sometimes  justifies  a  ''long  run" 
from  a  purely  economic  point  of  view.  A 
sacrifice  of  private  profits  may  be  necessary  unto 
this  end  of  national  economy.  ''The  mischief  will 
cure  itself"  may  bear  a  true  interpretation.  On 
the  other  hand  profitableness  even  at  a  low  rate  of 
profit  is  as  much  a  condition  of  economy  in  the 
State  as  in  the  individual.  A  low  rate  of  profit- 
ableness will  yield  a  total  in  course  of  time;  but 
unprofitableness  continued  for  a  century  will 
remain  unprofitable  still. 

There  is  another  sense  in  which  faith  in  the  long 
run  may  be  worthy  of  some  acceptation.  It 
may  be  simply  the  belief  that  as  time  goes  on  an 


IN   THE   LONG   RUN  115 

economic  tendency  becomes  a  stronger  and  strong- 
er power  in  society,  and  other  tendencies,  other 
kinds  of  ambitions,  become  relatively  weaker, — 
in  fact  that  the  course  of  events  is  fighting  for  the 
greater  predominance  of  the  economic  factor  in 
events. 

This  is  not  absolutely  self  evident,  for  the  control 
and  regulation  have  grown  too ;  but  it  seems  proba- 
ble to  a  very  great  degree.  It  means  among  other 
things,  that  political  power  will  be  mainly  de- 
termined by  economic  conditions,  just  as  cer- 
tain economists  (especially  the  first  Social  Demo- 
crats) believed  it  to  be  in  all  periods  of  history. 
It  is  hard  to  believe  it  was  always  so, — that  we  might 
have  said  ''Tell  me  your  industries  and  I  can  tell 
you  your  institutions."  Even  modern  industry 
subsists  alongside  of  the  most  curiously  different 
institutions.    But  it  is  perhaps  becoming  true  now. 

Fortunately  the  regard  for  the  public  economy 
and  public  welfare  in  general  seems  to  be  becom- 
ing a  little  stronger  also.  There  is  on  the  whole  a 
tendency  (not  economic  though  not  alien  to  econ- 
omy) on  the  part  of  men  in  civilized  countries  to 
seek  the  public  good.  It  is  not  very  pronounced; 
but  it  is  discernible.  In  some  countries,  as  Eng- 
land and  perhaps  the  United  States,  it  is  actually 
more  pronounced  than  the  tendency  to  provide  for 
the  future  of  the  individual.  These  two  countries 
are  not  the  countries  where  men  save  most,  but 
they  have  perhaps  most  public  spirit.  There  seems 
really  to  be  a  clearer  vision  than  formerly  of  the 


116  DISTURBING   ELEMENTS 

fact  that  the  life  of  the  community  is  more  sub- 
stantial on  this  earth  than  the  life  of  the  individual. 
The  increase  of  public  spirit  may  have  far  reach- 
ing economic  effects.  They  would  not  be  merely 
the  effects  of  the  saving  habits  of  the  prudent  man. 
It  is  beginning  to  be  recognized  that  'After  me  the 
deluge"  is  no  motto  for  a  civilized  man,  nor  even 
'After  me  and  my  family  and  kin  and  clan.'  There 
seems  no  sufficient  ground  for  supposing  that  in 
the  many  modern  instances  of  a  public  spirited 
use  of  wealth  the  public  spirit  is  superficial  and 
the  private  vanity  dominant;  it  is  rather  the  vanity 
that  is  superficial. 

After  all  those  wide  concessions,  it  may  still 
seem  that  the  term  economic  cannot  quite  fairly 
be  used  in  such  cases  without  explanation.  When 
the  expression  "economic  considerations"  or  "eco- 
nomic point  of  view"  is  used,  without  doubt  it  is 
the  economy  of  commercial  society  and  not  of 
the  State  that  is  suggested.  When  we  exchanged 
the  old  name  poHtical  economy  for  economics,  by 
general  agreement,  a  generation  ago,  it  was  to 
enable  us  to  discuss  any  and  every  kind  of  economy, 
domestic  and  national  included.  Perhaps  it  might 
be  well  to  keep  the  old  name  for  the  old  study  in 
the  narrower  limits,  in  spite  of  the  awkwardness  of 
the  adj  ective  political.  In  any  case  it  will  probably 
be  admitted  that,  if  we  used  economic  considera- 
tions without  explanation  for  what  served  the 
State's  economy  though  unprofitable  to  the  private 
citizens,  we  should  be  using  it  in  a  figurative  sense, 


IN   THE   LONG   RUN  117 

just  as  if,  to  take  the  opposite  case,  we  were  to 
speak  of  financial  considerations  for  what  affected 
the  income  of  private  citizens.  Finance  is  asso- 
ciated with  the  State.  We  associate  economics 
with  the  region  of  commercial  ambition,  where 
there  is  regard  not  to  long  periods  of  public  benefit 
but  to  the  main  chance  in  short  periods.  The 
dominating  tendencies  are  not  yet  very  seriously 
if  at  all  altered  by  any  trading  for  the  public  good 
such  as  Adam  Smith  set  down  as  hypocrisy  in 
his  day.  The  uniformities  we  study  are  those  of 
trading  for  private  advantage.  Indeed  we  can 
hardly  imagine  yet  what  uniformities  would  be 
yielded  by  a  philanthropic  trade  and  commerce. 
Perhaps  they  may  show  themselves  by  and  by. 

The  economy  of  the  State  is  of  course  meant  to 
be  patriotic,  which  is  a  nearer  approach  to  philan- 
thropic than  the  ordinary  economy  of  commercial 
competition.  But  it  is  just  this  economy  of  the 
State  that  has  varied  most  in  history,  each  patria 
having  different  needs  and  policies  at  different 
times.  It  is  this  that  changes  its  complexion 
with  changes  in  national  character  and  political 
events,  for  these  affect  the  positive  laws,  the  "his- 
torical categories"  of  some  of  our  friends. 

The  elementary  economic  principles  to  which 
reference  has  so  often  been  made,  can  be  traced 
through  many  historical  periods  and  in  the  most 
diverse  nations;  and  essentially  they  can  be  de- 
scribed as  the  development  of  division  of  labour 
and  commercial  ambition  working  together.   Even 


118  DISTURBING   ELEMENTS 

Gresham's  law  that  the  cheaper  money  drives 
the  dearer  out  of  circulation,  and  the  often  verified 
impossibility  of  preventing  exportation  of  the 
precious  metals  under  a  so  called  unfavourable 
balance  of  trade  are  of  this  origin  in  the  end.  Such 
economic  principles  do  not  much  depend  on 
institutions ;  they  tend  to  break  down  the  institu- 
tions that  resist  them.  It  is  of  their  nature  too 
that  they  affect  not  production  only  but  exchange, 
and  not  only  exchange  but  consumption,  so  far 
as  the  principle  of  subjective  value  is  allowed 
recognition. 

We  ought  not  therefore  to  allow  the  cry  of 
"national"  versus  '^commercial"  economy  to  dis- 
turb our  studies,  till  we  cannot  help  ourselves. 
There  is  one  case  in  which  we  cannot  help  ourselves 
Among  the  obstacles  that  encumber  the  path  of 
individual  economy  and  commercial  ambition  in 
all  civilized  countries,  replacing  the  much  fiercer 
and  ruder  obstruction  of  uncivilized  times  and 
countries,  there  stands  out  one  conspicuous, 
taxation. 

Is  taxation  in  any  sense  a  form  of  economy? 
It  was  not  so  taken  by  Ricardo  when  he  wrote 
of  the  'Principles  of  Political  Economy  and 
Taxation.'  It  is  a  stretch  of  charity  to  speak  of  it 
as  a  blessing,  though  of  course  it  may  be  the 
price  of  a  blessing.  We  try  to  reduce  the  cost  of 
all  blessings  to  a  minimum,  and  if  we  could  get 
those  of  the  State  without  paying  for  them  we 
should  certainly  do  so.    As  one  of  your  own  poets 


IN   THE   LONG   RUN  119 

has  said,  ''no  price  is  set  on  the  lavish  summer;" 
and  we  do  not  prize  it  the  less.  The  State,  however 
exacts  a  price  and  that  price  (or  one  of  the  prices) 
is  taxation. 

It  is  not  true  that  taxation  is  a  sort  of  ''robbery 
under  arms."  It  is  certainly  a  disturbing  element 
in  the  private  economy.  But  a  well  ordered  society 
is  only  conceivable  nowadays  under  the  shelter  of 
a  well  ordered  State,  and  therefore  the  economy  of 
the  State  is  a  condition  of  the  economy  of  the  indi- 
vidual, disturbing  it  for  its  own  good,  or  so  intended . 
In  paying  for  it  the  individual  is  no  more  suffering 
outrage  than  when  he  pays  for  the  other  neces- 
saries of  his  life,  few  of  which  can  be  had  at  the 
price  of  the  lavish  summer.  He  suffers  hardship 
only  if  the  economy  of  the  State  is  not  so  well 
ordered  that  the  steps  involved  in  it,  say  for 
Defence,  Justice,  and  Public  Works,  disturb  his 
private  economy  as  little  as  may  be  and  are  there- 
fore for  their  purpose  as  efficient  as  they  may  be. 

Political  Economy  may  have  some  light  to 
throw  on  the  extent  of  the  disturbance  and  on  the 
possible  minimum  of  disturbance  and  the  way  of 
securing  it.  What  are  called  the  Canons  of  taxa- 
tion (equality,  certainty,  convenience,  and  econo- 
my) are  perhaps  all  reducible  to  one,  economy; 
they  are  the  rules  laid  down  by  economists  for  the 
guidance  of  statesmen  who  wish  to  enable  the 
economic  tendencies  of  commercial  ambition  to 
make  their  way  through  necessary  obstacles  with 
least  friction,  if  the  metaphor  be  allowed. 


120  DISTURBING  ELEMENTS 

Except  Cantillon  perhaps  all  economists  of  the 
earlier  period  had  taxation  either  frankly  in  their 
text  or  else  constantly  in  their  minds  and  peeping 
out  in  the  text.  One  main  object  of  Adam  Smith 
was  to  wage  war  against  bad  taxes,  not  simply  to 
work  out  an  economic  system.  As  the  theology  of 
the  church  would  hardly  have  been  defined  bat  for 
the  heretics,  the  doctrines  of  political  economy 
might  have  lain  longer  undefined  but  for  the  mis- 
takes of  finance  ministers,  the  practical  men  who 
were  too  often  poor  in  theory  or  without  it  alto- 
gether. We  need  not  have  gone  to  theology; 
Malthus  was  roused  to  think  out  a  true  theory  by 
the  heretical  speculations  of  Godwin. 

The  financial  heresies,  however,  although  un- 
consciously built  on  false  theories,  do  not  come 
down  upon  us  as  speculations  but  as  claimants  for 
our  contributions.  The  most  insidious  disturbing 
element  to  the  student  of  taxation  is  his  private 
interest  as  regards  the  tax  gatherer.  Other  obsta- 
cles or  burdens  in  the  way  of  our  private  prosper- 
ity may  seem  to  have  been  put  there  by  nature  or 
providence;  but  here  is  one  that  comes  from  a  cause 
operating  by  human  will  and  modifiable  conceiv- 
ably by  our  own  will  or  powers  of  persuasion.  Like 
other  people  the  economist  may  have  a  bias  of 
self  interest.  One  of  the  few  virtues  which  the 
modest  Ricardo  believed  himself  to  possess  was 
indifference  to  his  self  interest.  No  doubt  this 
impartiality  was  made  easier  by  his  wealth  and  the 
subdivision  of  his  investments.    But  with  an  effort 


IN   THE   LONG   RUN  121 

even  the  poorest  of  us  may  be  as  impartial  as  David 
Ricardo;  and  to  be  genuine  political  economists 
we  must  make  the  effort.  Suppose  we  succeed 
we  have  still  other  disturbing  elements.  As  the 
theory  of  taxation  is  more  personally  interesting 
to  the  public  than,  say,  the  theory  of  subjective 
value  (value  in  use),  the  air  is  full  of  maxims  about 
it.  There  seems  to  be  a  special  temptation  here 
to  be  led  by  one  plain  simple  rule  as  it  will  be  called 
— a  rule  of  which  the  simplicity  is  greater  than  the 
simplicity  of  nature.  Never  was  there  a  case 
where  in  all  civilized  countries  of  the  modern  type 
it  was  more  evidently  impossible  to  put  the  whole 
truth  into  a  short  sentence.  If  we  try  to  do  it, 
the  maxim  becomes  at  once  a  disturbing  element. 
It  needs  courage  to  say  "I  cannot  put  the  whole 
truth  in  a  nutshell";  but  there  never  was  a  nut- 
shell big  enough  to  hold  the  entire  truth.  We 
must  deny  ourselves  the  popularity  of  the  dema- 
gogue, which  in  such  matters  proceeds  from  an 
inglorious  ease  in  theorizing. 

We  must  not  even  be  tempted  by  dicta  of  econo- 
mic writers.  There  is  an  optimistic  dictum  ''All 
taxes  are  so  shifted  that  nobody  bears  any  burden," 
— with  or  without  the  reservation  "in  the  long 
run,"  which  is  supposed  to  make  any  paradox 
true.  There  are  contrary  dicta  "All  taxes  fall  on 
the  land" —  "All  taxes  ought  to  fall  on  the  land" — 
"All  taxes  tend  to  stay  where  they  are  put."  Of 
these  four  the  last  is  nearly  as  optimistic  as  the 
first   (or  diffusion  theory)  though  asserting  the 


122  DISTUEBING   ELEMENTS 

polar  opposite,  and  precluded  from  appeal  to  the 
long  run. 

From  the  diversity  of  occupations,  division  of 
labour,  and  increasingly  complicated  forms  of  the 
industrial  system,  it  has  followed  in  fact,  even 
without  the  disturbance  of  law  and  politics,  that 
civilized  nations  require  not  one  tax  but  a  system 
of  taxes.  It  may  or  may  not  be  right  to  add  that 
the  load  of  taxation  should  be  distributed  over 
the  economic  faculty  of  the  society  or  even  of  the 
individual,  as  a  physical  burden  is  adjusted  to 
the  back  and  muscles;  this  is  a  flagrant  figure  of 
speech  and  may  justly,  therefore,  be  suspected. 

The  maxim  of  equality  though  it  suggests  the 
political  motto  already  considered  has  little  to  do 
with  it  but  in  name.  If  "final  utility"  has  taught 
us  less  than  was  expected  elsewhere,  it  has  been 
a  distinct  help  in  the  theory  of  taxation.  An  equal 
levy,  say  a  poll  tax  of  $100,  is  not  equal  in  burden- 
someness  to  all  citizens;  nor  is  an  equal  rate,  say 
10  per  cent  of  income,  even  of  net  income.  The 
poor  man  misses  his  10  per  cent  more  than  the  rich 
and  more  surely  lives  the  worse  for  it.  This  truth 
well  understood  helps  us  to  the  conclusion  that  the 
economically  strongest  should  bear  the  weight  of 
taxation.  All  taxation  is  an  evil;  the  question  is, 
since  taxation  is  inevitable,  who  should  bear  it  and 
who  can  bear  it  most  easily.  The  diminution  of  the 
rich  man's  economic  faculty  will  be  less  in  propor- 
tion though  the  apparent  burden  thrown  on  him 
be  greater  than  on  the  poor  man;  and  this  means 


IN    THE   LONG   RUN  123 

that  the  drawback  of  taxation  to  economy  all  the 
nation  over,  and  therefore  to  the  national  economy, 
will  be  at  its  minimum  when  the  heaviest  burden 
is  borne  by  the  economically  strongest. 

In  the  same  way  we  need  not  be  turned  from  a 
tax  by  being  told  it  is  "robbing  Peter  to  pay  Paul." 
It  may  be  absolutely  necessary  to  pay  Paul  (as 
in  England  we  pay  him  an  Old  Age  Pension) ,  and 
Peter  may  be  well  able  to  help  Paul,  and  not  at 
all  unwilling. 

Perhaps  you  say  unwillingness  has  nothing  to 
do  with  an  economic  argument.  But  absence  of 
unwillingness  means  that  the  tax  is  not  odious,  and 
an  odious  tax  is  likely  either  to  be  evaded  or  to 
produce  an  uneconomic  course  of  action. 

There  is  a  breaking  point  in  the  strain  (if  we 
may  use  a  scientific  figure  with  our  owncaveat  in  our 
minds),  even  when  the  strain  is  put  on  those  best 
able  to  bear  it.  It  may  be  true  that  taxation  puts 
no  obstacles  in  the  way  of  the  economic  man 
greater  than  nature  has  in  most  cases  put  already; 
but  we  must  remember  that  nature  sometunes 
makes  them  too  great  for  endurance,  and  the 
taxing  authority  may  conceivably  do  the  same. 
This  leads  to  a  larger  question,  of  what  is  called 
State  Interference.  Taxation  (except  to  those  who 
say  that  not  only  fees  but  all  taxes  are  a  quid  pro 
quo)  is  a  case  of  very  decided  interference.  There 
can  hardly  be  "laisser  Jaire,  laisser  passer''  with 
"that  two  handed  engine  at  the  door." 

The  Socialistic  State  of  the  popular  imagination 


124  DISTURBING   ELEMENTS 

would  convert  all  economy  into  public  economy; 
and  there  would  be  no  economic  activity  in  the 
old  sense  of  the  term.  But  there  are  not  many 
socialists  of  this  type.  The  ideal  of  reformers 
not  averse  from  the  name  socialistic  is  more  often 
a  State  that  carries  regulation  farther  than  at 
present,  but  retains  commercial  ambition  with 
its  claws  cut.  It  is  simply  more  of  what  we  now 
have  to  a  smaller  extent.  Within  the  great  civil- 
ized countries  (though  hardly  between  them)  there 
is  not  in  most  cases  a  regulation  so  severe  that  it 
prevents  us  from  saying  that  laisser  faire  is  the 
general  rule;  the  economist  need  not  fear  that  the 
economic  tendencies  which  he  traces  out  as  result- 
ing from  commercial  ambition  will  all  be  stopped 
by  the  State ;  there  is  usually  scope  somewhere  for 
a  true  economic  tendency,  if  not  with  us,  as  Plato 
would  say  ''somewhere  among  the  barbarians." 
It  is  not  the  ''liberty"  of  the  political  motto  we 
considered  at  first;  but  perhaps  on  that  account 
it  is  nearer  true  freedom.  That  we  are  not  allowed 
to  trade  in  men  or  to  treat  men  as  tools  or  mere 
animals  is  not  even  an  economic  hardship.  Laisser 
faire  carried  to  that  extremity  would  not  justify 
itself  even  in  the  long  run. 

If  an  appeal  for  unlimited  commercial  compe- 
tition is  examined  it  will  probably  be  found  to  mean 
either  that  we  are  asked  to  begin  with  a  tabula 
rasa  and  mere  struggle  for  existence,  which  we  can- 
not do  without  ceasing  to  be  civilized, — or  else 
that  the  existing  legal  distribution  of  property, 


IN  THE   LONG   RUN  125 

resulting  from  a  history  in  which  there  was  Httle 
laisser  faire  and  every  kind  of  interference,  is  to 
be  taken  as  it  is,  undisturbed,  and  the  very  un- 
equally equipped  competitors  are  to  pursue  their 
careers  in  business  without  any  new  interference. 
If  one  of  the  less  fortunate  in  the  distribution  were 
to  protest  that  his  economic  activity  could  not 
be  the  best  possible  if  the  results  of  the  old  inter- 
ference remained  to  his  disadvantage,  the  best 
answer  seems  to  be  that  to  accept  the  situation 
as  it  stands  is  likely  to  produce  less  waste  than  to 
"shatter  it  in  bits  and  then  remould  it  nearer  to 
the  heart's  desire."  It  seems  the  right  answer. 
But  it  means  that  we  know  we  have  two  evils  be- 
fore us  and  are  choosing  the  less;  and  from  the  less 
which  we  allow  to  remain  we  are  bound  to  clear 
away,  from  time  to  time,  what  ingredients  of  evil 
can  be  reached  and  expelled,  even  by  interference 
of  the  State,  Prof.  Foxwell's  wise  advice  is  not 
to  be  forgotten;  it  is  more  important  to  see  that 
the  acquisition  of  new  wealth  proceeds  justly  than 
to  try  to  redistribute  wealth  already  acquired. 
But  we  need  not  concede  more  than  his  concession, 
that  it  is  "more  important  and  more  practicable." 
Of  course  countries  differ  greatly  from  one  an- 
other in  their  ''existing  situation."  The  distribu- 
tion of  property  in  England  was  probably  one  of 
the  worst  among  the  trading  nations  at  the  time 
laisser  faire  was  most  loudly  demanded  by  certain 
writers;  it  is  even  a  point  in  favour  of  the  more 
rigid  view  of  laisser  faire  that  on  the  whole  so 


126  DISTURBING   ELEMENTS 

much  progress  in  better  distribution  has  been  made 
under  an  approach  to  laisser  faire  in  England  since 
that  time.  The  United  States,  on  the  other  hand 
had  at  that  time  a  position  among  the  best,  and 
if  laisser  faire  had  begun  then  (it  might  be  argued) 
it  might  best  have  secured  economic  prosperity 
for  all.  There  was  a  wider  equality  of  fortunes 
from  which  to  start. 

The  wisdom  of  governments,  however,  has  de- 
creed that  in  any  case  no  such  experiment  should 
be  tried  between  nations,  say,  between  the  United 
States  and  Canada ;  and  now  the  effects,  especially 
in  the  States,  of  one  kind  of  interference  need  to  be 
counteracted  by  means  of  another  kind  of  inter- 
ference; the  tariffs  make  the  trusts  possible  and 
then  laws  are  passed  to  keep  the  trusts  in  check. 
The  resources  of  America  are  so  vast  that  effects 
of  mistakes  of  this  kind  (for  so  they  seem  to  many 
of  us  outside)  are  less  serious  than  elsewhere. 
There  is  perhaps  at  this  moment  no  single  state 
of  the  Union  and  no  province  of  Canada,  perhaps 
there  is  not  even  one  county  of  either,  that  could 
faithfully  be  described  as  impoverished.  If  lais- 
ser faire  in  England  means  "plague  take  the 
hindmost,"  in  the  United  States  the  hindmost 
escapes  the  plague,  and  has  such  tolerable  pros- 
perity- himself,  outside  of  the  great  cities,  that  he 
can  afford  to  tolerate  the  millionaire.  But  it 
seems  possible  that,  if  the  States  had  been  thorough 
going  in  their  laisser  faire,  they  would  not  have 
seen  such  a  phenomenon  as  a  millionaire   or  a 


IN   THE   LONG   RUN  127 

proUtaire  at  all.  The  enthusiastic  writings  of 
Richard  Cobden  about  America  read  a  little 
sadly  now,  however  much  of  the  praise  is  still 
due. 

The  civilized  nations  of  the  world  are  now  a 
group  of  great  empires,  of  which  the  United  States 
are  one.  xA.re  these  to  be  a  nightmare  to  us? 
They  have  one  advantage  from  the  economist's 
point  of  view,  their  sheltering  power.  Within 
them  trade  and  commerce  have  peace  and  within 
many  of  them  not  only  peace  but  freedom.  The 
sheltering  power  is  a  priceless  advantage.  A 
country  like  Canada  under  the  shelter  of  the  Brit- 
ish Empire  can  go  forward  in  its  economical  de- 
velopment without  more  than  a  sentimental 
participation  in  the  care  of  defence,  which  vexes 
public  men  in  the  parent  country  quite  as  much 
as  the  ''eternal  want  of  pence"  in  Tennyson's 
Monologue.  It  is  unlike  a  state  of  the  German 
empire,  in  escaping  the  military  corvee  and  in 
having  the  privilege  of  a  tariff  of  its  own  making 
and  a  real  self  government  of  a  highly  democratic 
character.  In  the  United  States  you  have,  quite 
apart  from  the  new  conquests,  what  is  really  an 
Empire  of  Stiates,  giving  to  all  of  them  shelter  and 
peace  within  its  borders,  states,  little  less  in 
population  than  Canada  and  yet  economically 
one  with  their  sheltering  power.  Over  your  vast 
area,  teeming  with  men  and  with  every  variety 
of  competitive  industry,  economic  tendencies 
have  little  hindrance.    The  friction  begins  on  the 


128  DISTURBING   ELEMENTS 

frontier.  Elsewhere  there  is  an  almost  ideal  sit- 
uation for  the  student  of  political  economy  to 
studj'-.  No  doubt  there  is  waste,  not  the  huge 
waste  of  the  warlike  communities  of  Europe,  per- 
haps in  a  sense  more  culpable  than  theirs  for  it  is 
the  waste  of  wanton  strength;  but  its  consequences 
are  not  so  wide  spread  over  the  nation,  the  strength 
of  the  whole  nation  being  so  great. 

Englishmen  are  sometimes  surprised  that  polit- 
ical economy  is  so  much  studied  in  the  States;  bat 
it  would  be  strange  if  it  were  not  so.  Almost 
every  conceivable  phase  of  economic  tendency 
finds  scope  in  one  or  other  state  of  the  Union. 
This  very  University  has  produced  a  work  show- 
ing the  extraordinary  diversity  in  taxation  alone 
between  the  members  of  a  small  group  of  states. 
The  diversities  not  yet  described  must  be  legion. 

It  is  true  that  there  is  still  economic  friction 
created  on  the  frontier  by  the  economic  policy  of 
the  ruling  body.  The  day  has  not  come  when  (as 
Adam  Smith  suggested)  the  different  countries 
have  a  system  of  free  imports  and  are  related 
to  each  other  commercially  as  different  parts 
of  the  same  country,  say  different  states  of  the 
same  Union.  To  the  economist  there  are  strictly 
speaking  no  principles  of  international  trade,  none 
differing  economically  because  nations  differ  po- 
litically. There  are  principles  of  trade  modified 
by  distance,  unlike  habits,  and  difficult  communica- 
tion; but  those  are  illustrated  by  New  Orleans  and 
New  York  quite  as  well  as  by  New  York  and 


IN  THE   LONG   RUN  129 

Toronto.  The  superadded  questions,  superadded 
by  difference  of  nationality,  are  mainly  those  of 
taxation. 

Such  as  they  are,  it  is  only  too  probable  that 
they  will  need  to  be  considered  by  economists 
for  some  time  to  come.  Economists  will  have  the 
task  of  reading  out  of  and  through  those  obstacles 
the  perturbed  course  of  economic  tendencies,  be- 
fore which  they  would  like  to  see  spread  a  fairer 
field.  Just  as  we  might  wish  to  economize  legal 
intellect  in  the  Old  Country  by  the  removal  of  anti- 
quated subtleties  of  the  law,  so  we  might  wish 
to  economize  economic  intellect  in  the  New  Coun- 
try by  the  removal  of  fiscal  subtleties  that  shed  no 
light  on  economic  principles  but  reflect,  instead, 
the  workings  of  vested  interests  and  international 
jealousy.  It  is  not  only  the  modest  talent  of  the 
economist  but  the  commanding  genius  of  the  states- 
man that  would  benefit  by  the  removal.  It  has 
been  already  remarked  that  Protection  would  dis- 
appear with  international  jealousy.  Its  disap- 
pearance might  be  hastened  if  the  ordinary  ideal  of 
the  State  (supposing  that  there  is  any  articulate 
and  conscious  ideal  of  it  in  the  average  citizen) 
were  higher  than  it  seems  to  be.  Economists  were 
once  accused  of  a  desire  to  undervalue  the  State  and 
lower  its  functions.  The  assertion  may  be  haz- 
arded that  modern  economists  are  desiring  to 
magnify  the  State  when  and  because  they  would 
confine  the  action  of  the  State  to  the  great  en- 
deavours that  alone  seem  worthy  of  it. 


130  DISTURBING   ELEMENTS 

American  statesmen  are  free  from  some  of  the 
hard  problems  at  present  absorbing  the  best  in- 
tellects of  England.  They  do  not  on  this  Conti- 
nent discuss  Home  Rule  and  Church  Establish- 
ment; the  problems  are  solved;  and  there  is  little 
or  nothing  of  the  "Land  Question."  There  is  no 
trouble  about  a  hereditary  Chamber  of  Peers. 
You  have  already  Payment  of  Members.  Na- 
tional Defence  sits  easily  on  you  all.  But  you 
have  retained  the  many-headed  fiscal  problem  of 
which  English  statesmen  rid  themselves  sixty  years 
ago ;  and  you  have  still  a  Civil  Service  of  the  old 
rather  than  the  new  English  pattern. 

The  heavy-laden  English  Parliament,  with  your 
solved  problems  on  its  hands  unsolved,  would  have 
little  hope  of  solving  them  if  it  needed,  in  addition, 
to  help  all  classes  of  English  tradesmen  to  carry 
on  their  business,  and  provide  political  friends 
of  the  ruling  party  with  posts  in  the  public 
service.  America  has  the  large  problem  of  Race 
to  solve.  But  a  continent  saved  by  its  position 
in  nature  and  by  its  fortune  in  history  from  vexa- 
tions bequeathed  to  Europe  by  the  middle  ages 
might  seem  to  have  a  larger  hope  than  Europe 
can  ever  cherish.  It  may  well  hold  it,  so  long  as  it 
enforces  a  Munroe  doctrine  against  invading 
germs  of  European  distress  and  poverty  and  wrong. 
Unless  it  keeps  before  it  the  end  of  securing  and 
preserving  the  highest  possible  type  of  citizen- 
ship, the  State,  even  though  democratic,  may 
realize  the  fears  of  the  18th  century  philosophers 


IN  THE  LONG  RUN  131 

who  had  some  share  in  the  founding  of  this  Ameri- 
can Commonwealth;  it  may  cause  more  evils 
than  it  can  cure. 

Such  as  it  is,  the  State  is  indispensable,  and  each 
private  citizen  must  do  his  best  to  cure  its  evils. 
Perhaps  the  greatest  danger  in  a  prosperous  dem- 
ocracy is  the  political  apathy  of  the  "respectable 
classes."  Educated  men  should  take  to  heart 
Plato's  old  warning  that  the  hardest  of  punishments 
is  to  be  governed  by  a  worse  man  than  yourself. 

From  all  experience,  none  are  likely  to  do  their 
part  more  loyally  than  students  of  political  econ- 
omy. Reflection  does  not  lead  to  inactivity;  it 
only  makes  the  action  itself  more  wise  when  the 
reason  for  action  is  brought  home.  Meet  the 
malady  in  its  first  stage : 

^'Venienti  occurrite  morbo: 
With  which  moral  I  drop  my  theorbo." 


NOTES 


1.     'Conscientious  judge.'     They  say  in  Canada:    "So 
upright  that  he  leans  over  backwards." 
'Mill's  Plan,'  Dissertations,  Vol.  I,  Bentham,  p.  391. 

3.  'Book  in  breeches,'  a  description  of  Macaulay. 

4.  'Relative  vindication,'   a  favourite  phrase  of   Prof. 

Edward  Caird. 

5.  'Legal  friend,'  Sir  Thomas  Raleigh,  the  most  recent 

editor  of  Cornewall  Lewis's  Political  Terms. 

7.  'To  make  rights  secure.'      Wealth  of  Nations,  IV,  v, 

sect.  iv.  So  in  the  Lectures,  edited  by  Dr. 
Cannan,  p.  160,  he  says  the  end  of  law  is  security 
from  injury,  and  the  establishment  of  laws  and 
government  is  the  highest  effort  of  human 
wisdom. 

'Mercantile  republic,'  IV,  i. 

'Different  provinces,'  IV,  v,  sect.  iii. 

'New  colonies,'  IV,  vii. 

'Equality  of  remuneration,'  I,  x. 

'Equality  of  advantage,'  IV,  iii,  vi  (second  para- 
graph). 

8.  'An  English  writer.'      F.  C.   Montague,   Limits    of 

Individual  Liberty,   Rivingtons,   London,    1885, 

p.  6. 
Thorold  Rogers,  Six  Centuries  of  Work  and  Wages, 

Sonnenschein,  London,  1884,  e.g.,  p.  326  (ch.  xii). 
10.     'Simply  the  addition  of  such  units.'     James  Fitzjames 

Stephen,  Liberty,  Equality  and  Fraternity,  Smith 

Elder,  London,  1873,  p.  190. 
'Each   woman   also,'    Bentham,    Reform   Catechism 

(1818),  p.  35,  36,  and  note. 


134  NOTES 


13.  'Population  in  the  forefront.'  See  J.  S.  Mill,  Auto- 
biography, published  1873,  p.  105,  etc. 

16.  'Small  wonder.'  See  Autobiography,  p.  232.  The 
date  is  1841  and  afterwards. 

23.  'Stephen  sums  up.'     Liberty,  Equality   and   Frater- 

nity, p.  263. 

24.  'Increases  with  all  true  civilization.'     The  Japanese 

during  the  late  war  with  Russia  are  said  to  have 
taught  many  of  their  illiterate  prisoners  to  read 
and  write  Russian. 

25.  'Honour  thy  father,'  etc.     Stephen,  ib.,  pp.  211-2. 
27.     'Categorical  imperatives.'     At  Baltimore,  time  ended 

the  lecture  at  this  point,  but  the  following  pas- 
sage is  given  as  originally  written. 

II 

PAGE 

30.  'David  Hume.'     First  Principles  of  Government,  1741. 

31.  'Struggle  of  J.  S.  Mill.'      Unsettled  Questions,  last 

esssay,  on  Definition  and  Method  (dating  from 
1836). 

33.  'Used  indifferently' — like  the  words  habit  and   cus- 

tom; the  former  strictly  of  the  individual,  the 
latter  of  the  group. 

34.  Sir  William  Temple's  Works,  4th  ed.,  1720,  Vol.  I, 

pp.  47,  61,  and  97. 

45.  'Professor  Patten's  language.'     Dynamic  Economics, 

1892.  Social  Statics  is  the  name  of  a  book  by 
Herbert  Spencer  (1850),  and  the  term  occurs  in 
Comte's  Philosophic  Positive,  1839.  See  J.  S. 
Mill,  Pol.  Eg.  IV,  I. 

46.  'Without  doing  what  Bacon  told  us.'      'State  super 

vias  antiquas',  De  Augmentis  Scientiarum,  Book  I 
(p.  458  Vol.  I  in  the  edition  of  Bacon's  Works,  by 
Ellis  and  Spedding,  Longmans,  1872).  "Quum 
autem  de  via  bene  constiterit,  tunc  demum  non 
restitandum  sed  alacriter  progrediendum."  The 
reference  is  to  Jeremiah,  vi,  16. 


NOTES  135 


48.  'L'homme  aux  quarante  6cus.'  The  minister's  an- 
swer to  the  wiseacre  was :  '  I  declare  you  exempt 
from  the  tax.' 
'Second  best  faculty.'  So  Mill  says  in  his  Autobi- 
ography (p.  82) :  "The  writings  by  which  one  can 
live  are  not  the  writings  which  themselves  live 
and  are  never  those  in  which  the  writer  does  his 
best." 
'  A  good  saying  of  Mill's, '  Ldberty,  p.  148. 

52.  'Collective  wisdom,'  Aristotle,  Politics,  III,  6.  Car- 
lyle,  Latter  Day  Pamphlets,  e.g.,  I  and  VI. 

Ill 

PAGE 

59.  'The  proof  of  the  pudding.'  Professor  Stout's  words 
in  Mind,  1907,  p.  581. 

61.  'Sanely    and    wisely,'     J.  N.    Keynes:     Scope    and 

Method  of  Political  Economy,  Macmillans,  1891. 

62.  'Too  practical,'     Ricardo's  Letters  to  Malthus,  p.  96, 

compare  126,  167. 

66.  "The  late  Henry  Sidgwick."  The  writer  had  the 
privilege  of  publicly  expressing  this  obligation 
to  Mr.  Sidgwick  himself  at  the  Banquet  of  the 
British  Economic  Association,  28th  March,  1900. 

74.  '  Professor  Hollander,'  Quarterly  Journal  of  Economics 
(Harvard),  January,  1895. 

77.  'Minor  economists,'  J.  R.  McCuUoch,  Henry  Fawcett. 
In  this  case  W.  N.  Senior  takes  side  with  Ricardo 
and  Malthus,  the  major  economists. 

IV 

PAGE 

84.     'Modelled  on  the  physical  sciences.'     Prof.  S.  Patten: 
Dynamic  Economics,  page  12. 
'  Condition  of  sound  navigation. '  Quesnay  apud  Daire, 
Physiocrates,  I,  52. 


136  NOTES 


86.  'Imaginary  machine,'     Adam  Smith,  J^ssaj/s,  History 

and  Astronomy,  4to  ed.,  1795,  p.  44.  Cf.  Mor. 
Sent.,  Vol.  I,  Part  iv,  ch.  i,  p.  455  (6th  ed.). 
Hume  was  perhaps  the  worst  offender,  comparing 
the  attraction  of  the  sexes  among  savages  with 
the  attraction  of  two  flat  pieces  of  marble,  Hum. 
Nat.,  Book  II,  Of  the  Passions.  Part  iii,  sect,  i, 
Of  Liberty  and  Necessity,  Vol.  II,  p.  224,  ed.  1739. 

87.  'Similes  from  Physiology,'  e.g.,   Wealth  of  Nations, 

IV,  VII.  Colonial  Policy.  '  In  her  present  con- 
dition [1776]  Great  Britain  resembles  one  of  those 
unwholesome  bodies  in  which  some  of  the  vital 
parts  are  overgrown  and  which  upon  that  account 
are  liable  to  many  dangerous  disorders,'  etc. 
(McCulloch's  edition,  p.  272).  So  IV,  ix.  304. 
Agricultural  Systems.  The  'unknown  principle 
of  preservation'  contained  in  every  healthy 
human  body  has  its  counterpart  in  the  'natural 
effort  which  every  man  is  continually  making 
to  better  his  own  condition. '  The  former  corrects 
a  faulty  regimen  and  the  latter  a  bad  economic 
policy. 

Quesnay  apud  Daire,  I,  54;  Droit  naturel.  Reason 
is  to  the  mind  what  the  eyes  are  to  the  body. 

Hegel  and  Herbert  Spencer.  Philosophy  of  Right,  p- 
319,  §263,  Zusatz;§269,  Zusatz.  Study  of  Sociology, 
ch.   XIV.    Preparation  in  Biology,   p.  335. 

88.  'Less  ambitious.'    There  is  an  evident  analogy;  but  it 

may  not  be  right  to  argue,  for  example,  that,  be- 
cause a  substance  which  could  neither  be  assimi- 
lated nor  thrown  off  would  be  fatal  to  the 
body  of  flesh  and  blood,  therefore  the  Chinese 
and  Japanese  will  be  fatal  to  the  body  politic  in 
North  America. 
'Witty  saying,'  of  Mr.  W.  H.  Mallock  in  the  New 
Republic  (1877). 


NOTES  137 


89.  'Aristotle  noticed'   Politics,  iii.   6.     For  statistical 

uniformity  see  A.  L.  Bowley's  Elements  of  Stat- 
istics, 2d  ed.,  1902,  p.  7.  The  reference  to  Mr. 
Karl  Pearson  is  on  p.  5. 

90.  'Physiology   is   said'    etc.      See   Spencer,     Study   of 

Sociology,  pp.  334-5.  Milne  Edwards  is,  there, 
said  to  have  first  reached  the  idea  of  a  'physio- 
logical division  of  labour.' 

91.  'Species  by  itself,'  loc.  cit.,  p.  101. 

'The  State  as  an  organism,'  see  Hegel,  Philosophy 
of  Right,  §§46,  258  (Zusatz),  259.  The  book  dates 
from  1820. 

'A Super-Man.'  "IchlehreEuchdenUebermenschen. 
Der  Mensch  ist  etwas  das  tiberwunden  werden 
soil."  Nietzsche,  'Also  sprach  Zarathustra.' 
Vorrede,  3d  ed.,  1894,  p.  8. 
93.  'More  reserve  now.'  Prof.  Carl  Menger:  Methode 
der  Socialwissenschaften,  1883,  pp.  139  seq.,  is 
discriminating.  Even  in  a  popular  book  like 
J.  R.  Macdonald's  Socialism  and  Society,  1905, 
the  limitations  are  acknowledged. 

96.  'Violations  of  justice.'  SeeWealth  of  Nations,   I  x,  65 

(near  end  of  ch.) ,  iv,  v,  236  (Digression,  section  i). 

97.  'Defects  of  slavery.'      See  Wealth  of  Nations  1,  viii, 

36,  37;  IV,  vii,  263;  iv,  ix,  309. 

100.  'H.  D.  Macleod.'     Economics  for  Beginners,  lS78,i)p- 

2,  3,  21,  76. 

101.  'Professor   Stammler,'     Prof.    Rudolf    Stammler  of 

Halle,  Wirtschaft  und  Recht  nach  der  Materia- 
listischen  Geschichtsauffassung,  1896,  213  et  seq. 

102.  'Bacon,'  Novum  Organum,  i..  Aphorisms,  xxxviii  to 

xliv. 
'The  personal  bias.'     'Never  let  yourself  go  wrong 
in  your  logic;^  said  the  old  lawyer  to  the  young, 
'you  are  sure  to  be  found  out;  the  facts  are  at 
your  disposal.' 


138  NOTES 


PAGE 

105.  'Professor  Marshall,'  Principles,  1890,  1st  ed.,  Book  I, 
ch.  iv,  §1.  'Custom  is  a  disguised  form  of  slow- 
moving  competition'  and  with  an  effort  we  may 
penetrate  the  disguise.  The  passage  has  been 
modified  in  the  later  editions. 
'Countries  extracting  the  precious  metals.'  See 
Cairnes  on  'The  Australian  Episode,'  in  his 
Essays  on  Political  Economy. 

105.  Ricardo,  3d  ed.,  1821,  of  his  Political   Economy  and 

Taxation,  p.  469. 

106.  'In  the  long  run.'     The  phrase  has  a  sensible  advan- 

tage o\er  'In   the   end.'     Economic   facts   are 
better  described  as  in  motion  than  as  at  rest. 
Rest  is  in  any  case  only  a  mode  of  motion. 
108.     'Marshall.'      Principles,    1st   ed.,    1890,    v,    iv,    411. 
Economics  of  Industry,  1892,  pp.  228  seq. 

112.  'Religious    persecution.'     See    Fitzjames    Stephen: 

Liberty,  Equality  and  Fraternity,  pp.  87,  95,  96. 

113.  'Time  may  be  measured.'    This  is  an  affair  of  prosaic 

calculation.  It  is  not  the  affair  of  sentiment 
described  in  "As  you  Like  It"  (iii,  ii):  'Time 
travels  in  divers  paces  with  divers  persons.  I'll 
tell  you  who  time  ambles  withal,  who  time  trots 
withal,  who  time  gallops  withal,  and  who  he 
stands  still  withal.' 

117.  'Meant  to  be  patriotic'    Men  "learn  for  example  to 

love  their  country,  though  it  surprises  that  such 
an  abstraction  should  excite  so  much  interest." 
J.  R.  Seeley,  Ecce  Homo,  pop.  ed.,  p.  143,  ch.  xiii, 

118.  'One  of  your  own  poets.'     J.  R.  Lowell.    Sir  Launfal. 

119.  'Robbery  under  arms.'     Cf.  Whately:    Pol.  Ec,  24 

ed.,  1832,  lect.  i,  pp.  10,  11.  Unless  taxation  is 
a  just  (though  involuntary)  exchange,  it  is  (he 
says)    avowed    robbery. 


NOTES  139 


PAGE 


120.  'Except  Cantillon.'     A  large  exception  if  it  is  to  Can- 

tillon  we  are  to  '  go  back'  in  Economics  as  to  Kant 
in  Philosophy.  More  have  told  us  to  'go  back' 
to  Adam  Smith.  'Going  back'  may  sometimes 
perhaps  be  a  cautious  way  of  going  forwards — 
reculer  pour  mieux  sauter.  But  it  has  its  pitfalls. 
'Indifference  to  his  self-interest.'  Letters  to  Malthus, 
Preface,  xiv. 

121.  'Of  which  the  simplicity  is  greater  than  that  of  nature.' 

Cf.  Bacon,  Nov.  Org.  I,  xlv:  'Intellectus  htuna- 
nus  ex  proprietate  sud  facile  supponit  majorem 
ordinem  et  aequalitatem  in  rebus  quam  invenit.' 
'Dicta  of  economic  writers.'  (1)  Verri  and  Canard, 
(2)  Physiocrates,  (3)  Henry  George,  (4)  Thorold 
Rogers.  See  A.  R.  Seligman:  Shifting  and  Inci- 
dence of  Taxation,  1S92,  p.  39;  and  Cobden's  re- 
marks on  the  idea  that  a  national  debt  is  whole- 
some because  'in  the  system.'  England,  Ireland, 
America,  iii  (1835). 
125.  'Professor  FoxwelL'  Preface  to  the  English  trans- 
lation of  Anton  Menger's  Whole  Produce  of  La- 
hour,  ex,  (1899).  The  dictum  wins  assent  (it  may 
be  suspected)  because  we  take  for  granted  that, 
since  redistribution  is  always  going  on,  the  new 
and  better  distribution  will  under  this  super- 
vision 'in  the  long  run'  supplant  the  old  unsatis- 
factory one;  and  this  consummation  seems  likely 
to  be  secured,  if  the  supervision  is  strict  and 
vigilant. 

127.  'Richard   Cobden,'    England,  Ireland   and  America, 

1835. 

128.  'Different  parts  of  the  same  country,'   Wealth  of  Na- 

tions, IV,  V,  240.2. 
131.     'Hardest  of  punishments.'     Republic,  I,  347.  C. 
131.     'I  drop  mj' theorbo.'      'Qiowa.ivi.g,  Dramatic  Romances, 

'The  Glove.'     Works,  1868,  Vol.  IV,  178. 


INDEX 


Ability,  rent  of,  47. 

Also  and  Likewise,  85. 

Anarchism,  7,  42,  52,  66. 

Aristotle,on  collective  wisdom, 
52,89;  his  use  of  general  prin- 
ciples, 60. 

Art,  selective,  59. 

Assent  and  Consent,  33. 

Association  and  Combination, 
13  seq.,  18,  19,  26. 

Averages,  63,  89. 

Bacon  (Francis),  3,  46;  idola, 

102.    See  also  Notes. 
Bagehot  (Walter),  50,  61,  72. 
Balance  of  trade,  86. 
Bastiat  (Fr4d4ric),  58. 
Bentham  (Jeremy),  9  seq.,  97. 
Bentley  (Richard),  3. 
Bias,  personal,  5,  30,  53,  66,  77, 

100,  102,  120. 
Biology  and  economics,  87  seq. 
Bohm   Bawerk    (Prof.    Eugen 

von),  77,  108. 
Rowley  (Prof.  A.  L.),  89. 
Browning    (Robert),    131   and 

Notes. 
Burke  (Edmund),  55,  85. 
Butler  (Joseph),  35  (foot). 

Caird  (Edward),  4  and  Notes. 
Cairnes  (J.  E.   ),   61,   77  and 

Notes. 
Canada,  27,  29;  Indians,  32,  37; 

banking,  41;  relation  to  U. 


S.,  126,  129. 
Cannan  (Prof.  Edwin),  34. 
Cantillon   (Richard),  120   and 

Notes. 
Carlyle   (Thomas),  3,  52   and 

Notes. 
Casaux  (Marquis  de),  86. 
Chinese,  46  and  Notes. 
Civilization,  33,  53,  61,  63,  8S, 

116,  118,  122. 
Classical  Economists,  16,  75. 
Cobbett  (William),  3. 
Cobden  (Richard),  127,  138. 
Collective   bargaining,    78; 

wisdom,  52,  55,  56,  57. 
Coloured  races,    their  rights, 

22,  23;  in  Cape  Colony,  24. 
Competition,  46  seq. 
Comte  (Auguste),  15,  68. 
Consumption  of  wealth,  98  seq. 
Cooperation,  16,  39. 
Corn  Laws,  111. 
Cosmopolitanism,  28,  44. 
Cost,  69,  73,  118. 
Credit,  32  seq.,  101. 
Currency  and  Money,  38,  39, 

49,  67,  118. 
Custom,    in    relation   to   law, 

33  seq. 
Cyrenaic  philosophj',  64. 

Darwin  (Charles),  81,  88,91. 
Deduction,  60. 
Definitions,  31,  57,  81. 
Descartes  (Ren6),  8. 


142 


INDEX 


De  Tocqueville  (Alexis),  15. 
Development,  57,  90  eeq. 
Distribution,  57,  124,  125. 
Domestic  Economy,  99,  113. 
Dutch  honesty,  34. 
Dynamic  state  of  society,  45. 
See  Notes. 

Economic,  senses  of  the  word, 

116  seq. 
Economic  system,  43  seq. 
Economist  King,  47. 
Education,  48,  54. 
England,  17,  19,  23,  34,  41,  58, 

72,    73;    public   spirit,   115; 

laisser  faire,  125;  compared 

with  U.  S.,  130. 
Enterprise  and  Invention,  46 

seq.,  105  seq. 
Environment,  92. 
Ethics,  59,  64,  95,  102. 
Exploitation  of  the  workers, 

47,  54. 


Godwin  (William),  120. 
Government,  30  seq. 
Greatest  Happiness,  10. 
Greece,  19. 

Green  (Thomas  Hill),  11. 
Gresham  (Sir  Thomas),  law  of 

the  coinage,  38,  118. 
Guizot  (F.  P.  G.),  15. 

Hegel  (G.  W.  F.),  87. 

Hesiod,  60. 

History,  realistic  view,  62; 
logic  in  history,  103;  histo- 
rical categories,  117;  materi- 
alistic view,  40,  56,  68,  92, 
101,  115. 

Hobbes  (Thomas),  32. 

Hollander  (Prof.  J.  H.),  62,  73, 
74. 

Honesty  an  implied  warranty 
in  economics,  32,  33. 

Hume  (David),  30  seq.  and 
Notes. 


Factory  Acts,  21,  41. 

Fawcett  (Henry),  79. 

Final  utility,  26,  74,  122;  fer- 
tility, 74. 

Finance,  117,  120. 

Foxwell  (Prof.  H.  S.),  125  and 
Notes. 

Free  Trade,  6,  80,  128,  129. 

French  political  watchword,  5, 
6,  9;  equality  in  particular, 
22;  Revolution,  9,  24,  40; 
Code,  40. 

Fund  and  Flow,  87,  110. 

Generalization,  62  seq.,  90. 
Germany,  19, 


Impressionism,  59. 
India,  17,  45,  105. 
Infant  Industries,  111. 
Irish  Land  Laws,  39. 

Jevons  (W.  S.),  97,  98. 
Johns     Hopkins     University, 

128  and  Preface. 
Jurisprudence,  102. 
Justice,  interest  of  the  weak, 

42;   relation   to   economics, 

96. 

Kant  (Immanuel),  11. 
Keate  (of  Eton),  21. 
Kepler  (Johann),  60. 


/ 


INDEX 


143 


Keynes  (J.  N.),  on  method, 
61. 

Laisser  Faire,  123  seq. 

Language,  83  seq. 

Law,  English,  5;  commercial, 

relation  to  custom,  33  seq.; 

its  power,  41;  in  physics,  84 

seq. ;  of  property,  100  seq. ; 

its  demands  on  intellect,  129. 
Lewis  (George    Cornewall),  6 

and  Notes. 
Loria  (Prof.  A.),  40. 
Lowell    (James   Russell),   119 

and  Notes. 

MacCuUoch  (J.  R.),  11,  71,  79, 
106. 

Macdonald  (J.  R.),  Notes. 

Macleod  (Henry  Dunning), 
100,  101. 

Maine    (Henry  Sumner),   42. 

Majority,  rule  of,  11,  42. 

Mallock  (W.  H.),  88  and  Notes. 

Malthus  (T.  R.),  10,  12,  38,  62, 
68  seq.,  81,  86,  87,  120. 

Mandeville  (Bernard),  58. 

Marshall  (Prof.  Alfred),  105, 
108,  109  and  Notes. 

Marx  (Karl),  26,  40,  69,  115. 

Mathematics,  59. 

Monger  (Anton)  and  (Carl), 
Notes. 

Mill  (James),  11,  71. 

Mill  (J.  S.),  on  the  method  of 
teaching,  1,  2;  on  Bentham, 
11 ;  on  place  of  political  econ- 
omy, 13  seq. ,31;  on  liberty,  15 
seq.,  45;  education,  48; 
public  opinion,  52;  method, 


61;  verbal  disputes,  80.     See 

also  Notes. 
Montague  (Charles),  50. 
Montague  (F.  C),  8  and  Notes. 

Nation,   29,   96,   97,   99,    127. 
Nationalization  of  the  Land 

73. 
New  and  Old  World,  27,  129, 

130,  131. 
Nietzsche  (F.),  91  and  Notes. 

Organism,  91  seq. 
Originality,  18  seq,.  52,  53. 
Owen  (Robert),  13,  71. 

Patriotism,  117. 

Patten  (Prof.  S.  N),  45. 

Pearson  (Prof.  Karl),  89. 

Persecution,  18,  112. 

Philosophy,  95  seq. 

Physiocrats,  84,  85. 

Physiology,  89,  90. 

Plato,  2, 60, 124,  131  and  Notes. 

Political  Economy,  progress, 
2;  analysis  or  policy,  25  seq., 
53  seq.,  128;  definition,  31; 
a  late  comer, 44;  pragmatism 
in,  59;  method,  III  passim; 
so-called  laws,  85;  relation 
to  biology,  89;  how  called 
Economics,  116;  study  in  the 
U.  S.,  128. 

Political  Philosophy,  31,  41, 
54,  56. 

Population,  38,  72,  87. 

Pragmatism,  59. 

Probability,  35,  63,  87. 

Profits,  49  seq. 


144 


INDIjX 


Prohibition  of  the  sale  of 
strong  drinks,  20,  52. 

Proletariate,  29,  127. 

Protection,  28,  80,  126,  129. 

Psychology,  8,  95  seq. 

Public  business,  114;  debate, 
79;  opinion,  51;  spirit,  23, 
115,  116,  131. 

Quesnay  (Frangois),  7,  84,  87. 

Raleigh  (Sir  Thomas),  5  and 
Notes. 

Religion,  watchwords,  3;  pro- 
ceeds from  greater  to  less, 24; 
methods  of  business  intrud- 
ing into  it,  43;  its  object  of 
worship,  59;  a  fact  of  life,  101; 
prejudices,  106. 

Rent,  47,  72  seq. 

Ricardo  (D.),  11,  15,  28,  47,  62, 
63,  68  seq.,  97,  105,  106,  112, 
113,  118,  120,  121  and  Notes. 

Rogers  (J.  E.  Thorold),  8. 

Ruskin  (John),  3,  9. 

St.  Simon  (Henri),  13,  15. 
Saving  in  England  and  U.  S., 

115. 
Schiller  (Friedrich),  3. 
Schopenhauer  (Arthur),  107. 
Scotland,  34,  39,  42. 
Seeley  (J.  R.),  117  and  Notes. 
Seligman     (Prof.    E.   R.    A.), 

Notes. 
Sidgwick     (Henry),   66    and 

Notes. 
Slavery,  11,  96,  97. 
Smith   (Adam),   on  liberty,  6 

seq.;  optimism,  8;  commer- 


cial honesty,  34;  commercial 
ambition,  45,  63,  72;  waggon 
way,  50;  politics  and  econom- 
ics, 56;  natural  law,  85,108; 
his  metaphors,  86,  87;  on 
slavery,  96;  individualism, 
99;  consumer,  113;  hypocriti- 
cal trading,  117;  taxation, 
119;  free  trade,  6,  128. 

Smith  (Sydney),  3. 

Socialism,  15,  16,  39,  66,  123, 
124. 

Social  Philosophy,  54,  89,  91, 
92,  95. 

Society,  43,  67,  87,  93  seq. 

Solidarity,  43,  93,  94. 

Speculation  in  trade,  36;  in 
philosophy,  102. 

Spencer  (Herbert),  42,  87,  89, 
90,  91  and  Notes. 

Stammler  (Prof.  Rudolf),  101 
and  Notes. 

State,  20,  29,  42  seq.,  91  seq., 
114,  116  seq. 

Statistics,  5,  87,  88  seq.,  112. 

Stephen  (J.  Fitzjames),  6; 
reply  to  Mill,  17  seq. 

Stock  Exchange,  37. 

Sweating,  97. 

Swift  (Jonathan),  25. 

Tacitus,  66. 

Taussig  (Prof.  F.  W.),  77. 

Taxation,  2,  27,   111,   118  seq. 

Taylor  (Mrs.),  16. 

Temple  (Sir  William),  34  seq. 

Tendency,  105  seq. 

Tennyson  (Alfred),  127. 

Time  in  economics,   106  seq. 


INDEX 


145 


United  States  of  America, 
political  watchword,  5,  6,  9; 
land  and  liberty,  7;  public 
opinion,  19;  equality,  22; 
independent  labourer,  29; 
dollar  currency,  39 ;  Indians, 
90;  public  spirit,  115,  131; 
laisser  faire,  126  seq.;  politi- 
cal economy,  128;  present 
position,  130. 

Utilitarianism,  10,  97,  98. 


Value,  69,  96,  98,  121. 
Verbal  disputes,  80,  83  seq. 
Voltaire  (Arouet  de),  48. 

Wages  Fund,  73,  75  seq. 
Warranties, implied,  31. 
Watchwords,  2  seq. 
Whately  (Richard),  Notes. 
Withers  (Hartley),  50,  51. 
Women,  rights,  10,  21. 


AA    001021773    5 


